Individual Savings Accounts (ISAs)

Holding cash in the stocks & shares or insurance components

Cash may only be held in the stocks and shares and life insurance components of ISAs to invest in qualifying stocks and shares or life insurance policies. This includes cash subscriptions, interest and dividends, and proceeds from disposals of qualifying investments which have not yet been reinvested.

The ISA manager may pay interest on this cash while it is held in the account. There is no income tax to pay on this interest, but the manager by law must deduct a flat rate 20% charge before crediting it to the account. You do not have to declare this interest on a tax return.

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