ISA Eligibility: Who Can Open an ISA?

An ISA is an efficient way to save or invest without incurring tax on your gains. But who can open an ISA, and what do you need? We take a look.

Scales balancing question with the text “ISA Eligibility Who Can Open An ISA?” and The Motley Fool jester cap logo

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

So, you’ve heard about the tax benefits of an ISA and are thinking of opening one. But you don’t know who exactly is eligible or even what you need to do to open one. We’ve got the answers to your questions.

What is an ISA?

‘ISA’ stands for Individual Savings Account. It’s a tax-free account in which gains and income are not taxed. Basically, an ISA allows you to invest a limited amount of money (up to £20,000 each tax year) in assets without having to pay tax on the profits you make.

Bear in mind, though, that tax rules can change in the future and their effects on you will depend on your individual circumstances.

There are five main types of ISAs:

Who can open an ISA?

To be eligible to subscribe to an ISA, an investor must be:

  • 16 or over for a cash ISA
  • 18 or over for a stocks and shares or innovative finance ISA
  • 18 or over but under 40 for a Lifetime ISA

Additionally, you must be one of the following:

  • A UK resident (the Channel Islands and the Isle of Man don’t count)
  • A Crown employee (for example, working for a diplomatic or overseas civil service) or their spouse or civil partner if you do not live in the UK

If you have an ISA and then become a non-resident, you may retain the existing ISA but you cannot take out a new one.

Where can I open an ISA?

You can open an ISA at a wide range of institutions including:

  • Banks
  • Building societies
  • Credit unions
  • Stockbrokers
  • Friendly societies
  • Peer to peer lending services
  • Crowdfunding companies

What do I need to open an ISA?

If you are thinking of opening an ISA, your chosen provider will provide you with detailed information on what documentation you need to open an ISA with them. At the very least, you’re likely to need:

  • Proof of identity (a full UK passport or a UK photocard driving licence)
  • Proof of address
  • Your National Insurance number

Good for long-term, cost-conscious investors who want lots of flexibility

Interactive Investor Stocks and Shares ISA *

Interactive Investor Stocks and Shares ISA *
Apply Now On Interactive Investor’s secure website
Risk Warning Investments are complex and involve various risks, and you may get back less than you put in. Tax benefits depend on individual circumstances and tax rules, which could change.

The value of your investments can go down as well as up and you may not get back all the money you put in. All investments carry a varying degree of risk and it’s necessary for you to understand the nature of these risks. You should consider whether you understand how Stocks and Shares ISAs and Robo-Investing products work and whether you can afford to take the risk of losing money. Remember that taxes can be complicated and the tax benefits of these products depends on your personal circumstances. Tax rules are subject to change. The Motley Fool believes in building wealth through long-term investing and so we do not promote or encourage high-risk activities including day trading, CFDs, spread betting, cryptocurrencies, and forex. Click here to learn more

Trading Commission

From £3.99

Account Management Fee

From £4.99

  • Pros & Cons
  • Fees & Charges

Pros

  • Very cheap trading costs 
  • Flat-rate platform fee structure
  • Inclusive free trades with some plans

Cons

  • No dealing fee discount for frequent trading
  • Some plans can be expensive for smaller portfolios
  • Limited trading tools

Interactive Investor offers three different subscription plans – these are easy to switch between at a later date, should circumstances change.

Investor Essentials plan

Platform Fees:

Monthly subscription fee: £4.99

Equities custody charge: covered by subscription fee

Fund management charge: covered by subscription fee

Note: the ‘Investor Essentials’ plan has a £50,000 investment limit; if this is exceeded the account will automatically be upgraded to the ‘Investor’ plan.

Dealing Fees:

UK shares & ETFs: £3.99

US shares: £3.99

Other international shares: £9.99

UK fund trades: £3.99


Investor plan

Platform Fees:

Monthly subscription fee: £11.99

Equities custody charge: covered by subscription fee

Fund management charge: covered by subscription fee

Dealing Fees:

A monthly dealing credit, worth £3.99, is included as part of the account subscription and is valid for 31 days. (Equivalent to 1 free trade per month).

Additional trades are charged as follows:

UK shares & ETFs: £3.99

US shares: £3.99

Other international shares: £9.99

UK fund trades: £3.99


Super Investor plan

Platform Fees:

Monthly subscription fee: £19.99

Equities custody charge: covered by subscription fee

Fund management charge: covered by subscription fee

Dealing Fees:

A monthly dealing credit, worth £7.98, is included as part of the account subscription and is valid for 31 days. (Equivalent to 2 free trades per month).

Additional trades are charged as follows:

UK shares & ETFs: £3.99

US shares: £3.99

Other international shares: £5.99

Fund trades: £3.99


Applicable to all plans

Regular investing service: free to use (£25 minimum investment amount, no dealing fees)

Spot + FX fees: 1.5%

Telephone dealing charge: £49

Note: For UK and US trades over £100,000, and other International share trades over £25,000 additional fees and charges apply. (See the Interactive Investor website for full details.)

* This is an offer from one of our affiliate partners. For more information on why and how we work with partners, click here.

Can I open more than one ISA?

Yes. There’s no limit on the number of ISAs you can have overall. That said, you can only pay into one of each type of ISA in each tax year. The total amount you put in – across all ISAs – must not exceed your annual ISA allowance of £20,000.

Can I open an ISA with someone else?

No. ISAs can only be taken out by an individual. However, you can pay into someone else’s ISA (or someone can pay into yours) as a gift.

You can also open a Junior ISA for children under 18.

Can I transfer my ISA to another provider?

Yes. If you have already opened and paid into a cash ISA, for example, and see a better rate on the market, you can transfer your ISA savings to the new provider.

However, don’t simply withdraw your money or close your account entirely as then you’ll lose its tax-free status. Instead, ask your provider to arrange the transfer.

To learn more about ISAs, take a look at our top-rated stocks and shares ISAs in the UK and find a good fit for your financial needs.

The content in this article is provided for information purposes only. It is not intended to be, nor does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

This article contains general educational content only and does not take into account your personal financial situation. Before investing, your individual circumstances should be considered, and you may need to seek independent financial advice.  

To the best of our knowledge, all information in this article is accurate as of time of posting. In our educational articles, a "top share" is always defined by the largest market cap at the time of last update. On this page, neither the author nor The Motley Fool have chosen a "top share" by personal opinion.

As always, remember that when investing, the value of your investment may rise or fall, and your capital is at risk.