ISAs explained in 5 minutes

An ISA — Individual Savings Account — is simply a wrapper that protects your money from tax. Any interest or investment growth inside an ISA is yours to keep, with nothing owed to HMRC.

The £20,000 allowance

Each tax year (6 April to 5 April) you can pay up to £20,000 into ISAs. You can split it across different types, but you can't carry unused allowance into the next year — so it's worth using before April.

The main types

A Cash ISA works like a tax-free savings account. A Stocks & Shares ISA lets you invest for potentially higher long-term growth (with more ups and downs). A Lifetime ISA adds a 25% government bonus for a first home or retirement, with rules attached.

As a way to picture the options: a Cash ISA suits money you'll need soon, while a Stocks & Shares ISA is aimed at long-term goals (with more ups and downs). Which fits depends on your own goals and timeframe — this is general information, not advice on which to choose.