Individual Savings Account

An Individual Savings Account (ISA; /ˈaɪsə/) is a class of retail investment arrangements available to residents of the United Kingdom. It qualifies for a favourable tax status. Payments into the account are made from after-tax income. The account is exempt from income tax and capital gains tax on the investment returns, and no tax is payable on money withdrawn from the scheme either. Cash and a broad range of investments can be held within the arrangement, and there is no restriction on when or how much money can be withdrawn.Funds cannot be used as security for a loan. It is not a pension product, but can be a useful tool for retirement planning.

Origins

ISAs were introduced on 6 April 1999, replacing the earlier Personal Equity Plans (PEPs; very similar to a Stocks and Shares ISA) and Tax-Exempt Special Savings Accounts (TESSAs; very similar to a Cash ISA). Other tax-advantaged savings that also predate ISAs include many offered by National Savings and Investments, which is a state-owned institution which has in the past offered a range of other tax-free accounts, in addition to its own ISAs.