An Individual Savings Account (ISA) is a type of tax-advantaged savings account available to residents of the United Kingdom. It allows individuals to save or invest up to a certain amount each year, without having to pay taxes on the interest earned or any capital gains.
ISAs were introduced in April 1999, as a replacement for Personal Equity Plans (PEPs) and Tax-Exempt Special Savings Accounts (TESSAs). They were introduced by the then-Chancellor of the Exchequer, Gordon Brown, as a way to encourage individuals to save and invest while also offering tax benefits.
The introduction of ISAs marked a significant change in the way that individuals could save and invest in the UK, as they offered a much wider range of investment options than PEPs and TESSAs. They have since become a popular choice for saving and investing, and the rules and regulations surrounding ISAs have been revised and updated several times since their introduction.
There are several different types of ISAs available, including cash ISAs, which function like traditional savings accounts and pay interest on the balance; stocks and shares ISAs, which allow individuals to invest in a wide range of stocks, funds, and other securities; and lifetime ISAs, which are designed for first-time home buyers and offer a bonus on the money saved.
ISAs are a popular choice for saving and investing in the UK, as they offer a simple and tax-efficient way to save for the long term. However, it is important to note that the amount that can be saved in an ISA each year is subject to annual limits, and the rules and regulations surrounding ISAs can change from year to year.
