What are ISAs?

What are ISAs?
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Individual Savings Accounts or ISAs are tax-efficient accounts in the UK, that enable retail investors to save or invest without being taxed on the interest or income they earn. 

ISAs come with a few restrictions, one of them being the amount you can save or invest in one tax year, also known as your ISA allowance. For 2022 - 2023, the ISA allowance is set at £20,000.

There are a few different types of ISAs that you can choose from, such as Cash ISAs and Stocks and Shares ISAs, Lifetime ISAs and Junior ISAs. Each tax year, you can either choose to invest in one type of ISA or distribute your allowance across different ISAs, but you can only open one new ISA (per type) per year.
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ISA Allowance 2022-23
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• Cash and Investment ISAs - £20,000
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• Junior ISAs - £9,000
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• Lifetime ISAs - £4,000
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Find out more about the different types of ISAs here: Account Wrappers 
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Who can open an ISA?
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To open an ISA, you must be - 
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• 16 years of age or older for Cash ISA 
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• 18 years or older for Stocks and Shares ISA
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• 18-40 years of age for Lifetime ISA 
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• Under 18, or a parent or guardian of a child under 18 for Junior ISA
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• A UK resident (or a Crown employee)
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What are the benefits of opening an ISA? 
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One of the main reasons savers choose ISA is that it offers a tax break. But investing in ISAs has other benefits, including:
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• You can withdraw funds from cash and investment ISAs without losing any tax benefits (experts do not recommend early withdrawals). 
  
  If your ISA is flexible, you can remove money from your account and invest it again without reducing your allowance for that year. So if you invested £5k out of your £20k allowance and then withdrew £3k, your allowance for that year would be £18k if your ISA is flexible and £15k if your ISA is not flexible.
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• ISAs are transferable. You can switch from a Cash ISA to a Stocks and Shares ISA or switch providers to get higher interest rates. Most providers will enable this automatically, or via submission of a form.
  
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• ISAs have no upper age limit; a child between the ages of 16 - 18 can have a Junior ISA as well as a Cash ISA
  
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• The inherited ISA allowance allows your account to be passed on to your spouse or partner after death. 

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WealthKernel’s ISA APIs 
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WealthKernel is an HMRC ISA Manager, and we support most tax wrappers. Using our API, your business can offer investors flexible investing products however they want to invest. 
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Depending on the tax wrapper you want to offer your users, you can easily and quickly create accounts and portfolios.
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To learn more about using our account creation API, and specifically, ISA account opening requirements, check our API documentation.

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An example of a fintech that currently utilises our investing infrastructure to offer its users access to APIs is Topia, an app based on the FIRE movement (Financial Independence Retire Early). Topia uses WealthKernel’s flexible ISA and SIPP tax wrapper APIs and its portfolio management and trading functionalities to power the app. 

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Disclaimer - Capital at risk. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

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