< Aviva Stocks & Shares ISA

How do ISAs work?

Understanding your options

An ISA, or Individual Savings Account, is a tax-efficient way to save and invest your money.

In each tax year you can pay in to any type of ISA up to the annual limit or allowance. And you don’t pay Income Tax or Capital Gains Tax on the interest or returns your money makes.

Here's a quick guide to the different types of ISA you could choose from.

Annual ISA allowance

Your annual allowance is the total amount of money (set by the UK government) that you can add to ISAs within any single tax year before you start to pay Income or Capital Gains Tax on the returns you make. 

You can take out one of each type of ISA a year and spread your allowance across any of them, in addition to the separate Junior ISA annual allowance.

You get a new allowance each tax year and can pay into an ISA every tax year and as long as you keep your money within the ISA you'll still benefit from the tax-efficiency.

You don’t have to use the full amount of your ISA allowance – it’s only a maximum amount. But you won't be able to carry over any portion of the allowance you haven't used that year.

The minimum amount you can put in an ISA varies. You can also choose ISAs which allow you to pay in money regularly, pay in a lump sum, or go for a combination of the two.

Depending who you invest with and the type of ISA you choose, you could be able to withdraw money from an ISA and pay it back in again without affecting your £20,000 allowance. You just need to make sure that any money you withdraw is paid back in during the same tax year.

You can also choose to transfer an ISA from one company to another (though this could incur a charge depending on your provider).

Stocks & shares ISA

This is a tax-efficient way of investing your money and is generally considered a medium to long-term investment. Within a stocks & shares ISA, you can choose to invest your money in a variety of ways.

Depending on the type of investments you choose, the value of your investment can go down as well as up and you may get back less than you have paid in.


Rather than buying and selling individual stocks, shares or bonds yourself, you can invest in funds. Broadly, there are 2 types of fund – actively managed and passively managed funds.

Actively managed funds have a fund manager who makes the investment decisions on your behalf with the goal of making better returns than the overall performance of the stock market.

A passively managed fund tracks a defined stock market and will match that market’s returns or losses. As passively managed funds don't involve a fund manager, the fees and charges are generally lower than active funds.


Gilts are a a bond issued by the UK government so they can borrow money at a rate of interest, usually for a fixed term. As they’re issued by the UK government, gilts are usually seen as a lower risk option than stocks or shares (which can fluctuate in value).


A share is a unit of ownership in a company. Listed on stock exchanges around the world, stocks can rise and fall in value easily, so are riskier than most other investments. However, they usually offer the greatest chance of higher returns over the long term.

Cash ISA

Basic and higher rate tax payers get a Personal Savings Allowance (PSA) that sets the amount of interest they can earn tax-free in any year.

Using a cash ISAs gives you further flexibility to earn interest without paying tax on the interest earned from the ISA. Different accounts are available, which can offer easy access to your money – useful for short term savings.

When deciding what to do with any spare money you have, it’s worth bearing in mind the effect of inflation on what your money can buy. If inflation is higher than the interest you’re earning, then the cost of living is going up faster than the rate at which your money is growing.

Other types of ISA

Help-to-Buy ISA

First-time property buyers get a 25% bonus from the government (up to £3,000) added to their savings in a Help-to-Buy ISA when any property purchase is complete. The scheme  will be open to new savers until 20 November 2019

Innovative Finance ISA

Invests your money in peer-to-peer loans. With this type of ISA your money isn’t protected by the Financial Services Compensation Scheme.

Lifetime ISA

For people aged 18-39 who are saving for their first home or their retirement. The government will pay a 25% bonus (up to £1,000 a year) on the money you invest.

Junior ISA

Allows you to save on behalf of a loved one under 18, such as your child or grandchild. The money is held in the child’s name and is locked away until they reach 18.

Aviva Stocks & Shares ISA

Make the most of saving for tomorrow by investing in a tax-efficient stocks and shares ISA.

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