Accounts
ISA (Individual Savings Account)
An ISA is a UK account that shelters savings and investments from UK tax, up to an annual allowance.
A stocks and shares ISA lets a UK resident hold funds, shares, and other qualifying investments inside a tax wrapper. Dividends and gains inside the ISA are not charged UK income tax or capital gains tax. The allowance is set each tax year and, if unused, is not carried forward. The wrapper does not make a bad investment good. It changes the tax on whatever you put in it.
ISAs are not pensions. You can withdraw without the pension age rules, which is why people use an ISA for goals before retirement and a pension for retirement itself. Contribution limits, eligible investments, and the lifetime treatment of the allowance change with legislation. Check the current UK allowance before you act. This page is an explanation, not tax advice.
Formula
A stocks and shares ISA is a UK wrapper: returns inside the annual allowance are free of UK income tax and capital gains tax.
Live example
Apple Inc. (AAPL) last printed at $345.33 with a market cap of $5.04T. This quote has no dividend yield, which is itself the example: yield is blank when no dividend is being capitalized.
Related
SIPP (Self-Invested Personal Pension) · ETF (Exchange-Traded Fund) · Dividend Yield
See it on a list: best stocks · screener
Questions
Is an ISA only for cash?
No. Cash ISAs hold cash. Stocks and shares ISAs hold investments. The tax idea is similar and the contents are not.
Does an ISA avoid US dividend withholding?
Not automatically. US withholding on US dividends is a US tax. The ISA shields UK tax. They are different systems.