ISAs: Everything you need to know

Chances are you’re already putting money aside. It might be in a savings account. Or just sitting in your current account. But here’s the real question: are you putting your money to work? Because with an ISA, you can save or invest your money without paying tax on interest or gains. ISA stands for Individual Savings Account. Each tax year, you can put up to £20,000 in your ISA to save and invest tax free. This can be either put it in one ISA, or you can split your £20k across different types (I’ll go into this later). But here’s the key benefits: No tax on interest No tax on dividends No tax on capital gains - meaning you don’t pay tax on any increase in the value of your investments It’s basically HMRC saying, “Those returns? They’re yours.” Here’s the thing most people don’t realise. Taxes don’t just hit your salary; they can quietly chip away at your savings and investments too. And over time, that difference adds up. But an ISA helps protect your money from that. (It’s later!) There are a few types, but let’s keep it simple. 1. Cash ISA This works like a normal savings account, but you guessed it – tax-free. Your money sits there, earns interest, and your capital isn’t exposed to day-to-day market ups and downs. It’s important to know that the interest rate can change unless it’s fixed. It’s particularly great for: Short-term goals Emergency funds People who prefer low risk It’s also worth flagging From April 2027, if you’re under 65, you can put £12,000 a year into a Cash ISA – all within your £20,000 ISA allowance. 2. Stocks & Shares ISA This is where investing comes in. Instead of just saving, your money is put to work in things like: Shares Bonds Funds (including Exchange-Traded Funds, or ETFs – we have a great episode breaking them down; make sure you watch it!) Yes, values go up and down. But over the long-term, investing has historically led to higher returns than just saving. Think of it like this. A Cash ISA is like keeping your money in a pot – it earns interest and grows steadily. Whereas a Stocks & Shares ISA is like planting it and giving it the potential to grow much faster over time. So how do you actually get started? Well, I can explain in four easy steps. Step 1: Open a Stocks & Shares ISA Takes minutes online with a provider. You’ll just need to add your personal details and your NI number. Step 2: Add your money Up to your annual ISA limit. And this can be split however you’d like! For example, you could do 50/50, so £10 in cash and £10 in investments, or you could do £5 and £15 – just depends on your goals. Step 3: Choose your investments Some platforms will guide you – you just need to answer a few questions about your goals and risk level, and they build a ready‑made portfolio for you. Or, if you prefer to choose yourself, many people start with ETFs because they bundle lots of different investments into one – like a starter pack for your portfolio. Step 4: Invest You just need to enter the amount you want to invest and place your order through the platform. And just like that… your money is in the market. But remember, investing isn’t risk-free, so your money can go up and down. But doing nothing has a cost too – especially with inflation in the background. So, here’s what to remember: ISAs protect your money from tax You can put up to £20k in them each tax year Cash ISAs = stability Stocks & Shares ISAs = higher growth potential And getting started is much simpler than you think You may also be able to earn some interest tax‑free outside an ISA through the Personal Savings Allowance — but as your savings grow, ISAs can become an increasingly powerful way to protect more of your money from tax. Sometimes, the biggest barrier to investing isn’t money, it’s misinformation. So, if you’re serious about building your money over time, an ISA is an excellent starting point. Let’s play a quick game of ISA… fact or fiction! “Investing is too complicated.” Fiction: Getting started is actually simple – and can take just minutes online “You need loads of money to invest in an ISA.” Fiction: You don’t - you can start with as little as £1. “ISAs are just savings accounts.” Fiction: They’re a tax-free wrapper – where you can either save (with a Cash ISA) or invest (with a Stocks & Shares ISA). Get the full break down in our latest episode of BlackRock Basics on ISAs!