Here’s what you need to know about Individual Savings Accounts (ISAs) in 2025
On this page, we offer valuable insights into ISAs and help you understand the factors to consider when selecting ISA investments that align with your individual goals.
What is an Individual Savings Accounts (ISA?)
An ISA is a tax-efficient investment wrapper that allows you to save or invest money without paying UK tax on the returns your investments generate. A wrapper holds investments and shields them from certain taxes. This can boost your overall return, helping you to achieve your long-term financial goals. It’s important to understand that the value of investments can fall as well as rise and you may not get back what you invest.
There are various types of ISAs, each with unique features and benefits. The most common types include Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs and Lifetime ISAs.
- A Cash ISA is a savings account where your money is held in cash, earning interest tax-free. It is a low-risk option, though returns are limited to available interest rates.
- A Stocks and Shares ISA allows you to invest in a much wider range of assets such as stocks, bonds and collective investment vehicles like investment trusts. The value of your investments can fluctuate and there is a possibility of losing money. But for investors that are comfortable taking on this higher level of risk, there is the potential for greater long-term returns. That means you should be prepared to invest for at least 5 years.
- An Innovative Finance ISA is designed for peer-to-peer lending and allows you to invest in loans through online platforms.
- A Lifetime ISA, available to individuals aged 18 to 39, is aimed at saving for a first home or retirement, with a government bonus of 25% on contributions, up to a certain limit, making it an attractive long-term savings option for younger savers.
Who can invest in an ISA?
- To open an ISA, you must be at least 18 years old. For a Lifetime ISA, the age requirement is under 40.
- Individuals born between 6 April 2006 and 5 April 2008 are eligible to open a cash ISA before reaching the age of 18.
- Eligible applicants must be UK residents, members of the armed forces, Crown servants (such as those in diplomatic or overseas Civil Service roles), or their spouses or civil partners, even if residing outside the UK.
Why invest in an ISA?
Investing in an ISA offers several benefits. Primarily, you have the prospect of tax-free returns, meaning any interest, dividends or capital gains earned within the ISA will not be subject to income or capital gains tax, boosting your overall returns over time. Increases to capital gains tax in the 2024 UK budget make the ISA’s tax benefits potentially more flexible to investors.
Meanwhile, ISAs provide flexibility, allowing you to choose the type of ISA that aligns with your financial goals and risk tolerance. They also offer access to a broad range of investment options, giving you the opportunity to diversify your portfolio and ultimately increasing your chances of long-term financial success.
ISA allowance and limits
The annual total ISA allowance for the 2025 tax year is £20,000. Investors can fund several ISAs of the same type (with the exception of the Lifetime ISA) per tax year. You can transfer your ISA funds from one provider to another at any time.
The annual ISA subscription deadline is currently the last day of the tax year, 5 April. To make the most of your ISA allowance, ensure you contribute before this deadline to utilise the tax benefits. You may wish to consider spreading your contributions throughout the year through a savings plan rather than waiting until the end of the tax year.
Choosing the right ISA for you
When selecting the right ISA, it's important to consider your individual circumstances and investment goals. If you have a long investment horizon and are willing to ride out short-term market fluctuations, a Stocks & Shares ISA may be suitable. However, if you have a shorter time horizon or prefer a more stable return, a Cash ISA may be more appropriate.
If you are unsure which option will work best for you, we recommend you seek financial advice from an independent advisor. If you don't already have one, you can find one at www.unbiased.co.uk.
Investment trusts for your Stocks and Shares ISA
There are many providers of investment solutions for your Stocks and Shares ISA. Schroders offer a variety of investment trusts that you can hold within your ISA, providing you with options to diversify your investment portfolio and potentially enhance your returns.
Investment trusts provide flexible access to some of the world's most dynamic markets and regions. They are public companies that are run by professional fund managers and overseen by an independent board of directors, to ensure they always act in the best interests of investors.
By investing in an investment trust, you become a shareholder in the company. As a result, you have the right to vote on a range of issues including any changes to the investment policy and the re-election of directors. Meanwhile, by pooling your money with other shareholders, investment trusts enable you to gain exposure to a broad range of companies, regions and industries that you may not be able to access as an individual.
Read more about investment trusts here >
Who are Schroders? >
Schroders manages an award-winning range of investment trusts, with distinct characteristics and each of them targeting different market opportunities. This allows you to tailor your investment decisions towards your specific preferences and goals. By incorporating Schroders' investment trusts into your ISA, you can benefit from our expertise in asset management and our commitment to delivering value to investors and keeping you well-informed on your investment journey.
Find out more about the Schroders range of investment trusts >
Why choose Schroders for your ISA?
When you choose Schroders for your ISA, you benefit from:
- Expertise: Our team of experienced investment professionals brings a wealth of knowledge and expertise to managing your investments, helping you navigate the complexities of the financial markets
- Range of options: We offer a broad selection of investment trusts, giving you the opportunity to diversify your portfolio and align your portfolio with your financial goals
- Support: With regular investment updates, webinars and compelling insights from our portfolio managers, we aim to keep you informed you at every step of your investment journey, ensuring that you have the information and guidance you need to make informed decisions
- Performance: We are committed to delivering strong, long-term performance for our investors, leveraging our research capabilities and market insights to help you find opportunity where others don’t
Whether you are new to investing or have experience in the markets, Schroders is here to help you make the most of your ISA. Explore our range of ISA investment trusts and start your journey towards achieving your financial objectives today.
As with all investments your capital is at risk and you may get back less than you invest. Investments should be held for the medium to long term (5+ years), unless there is a fixed term that applies.
Fund risk disclosures and important information
We recommend you seek financial advice from an Independent Adviser before making an investment decision. If you don’t already have an Adviser, you can find one at www.unbiased.co.uk or www.vouchedfor.co.uk. Before investing in an Investment Trust, refer to the prospectus, the latest Key Information Document (KID) and Key Features Document (KFD) at www.schroders.co.uk/investor or on request.
For help in understanding any terms used, please visit address https://www.schroders.com/en-gb/uk/individual/glossary/