Investment ISAs: What You Can Hold and How to Choose

An investment ISA is a stocks and shares ISA or an innovative finance ISA. The GOV.UK ISA guide says a stocks and shares ISA can hold company shares, funds and bonds, while an innovative finance ISA holds peer-to-peer loans and similar. Both use the same £20,000 limit for 2026/27.

Tax year 2026/27. Last reviewed 27 October 2026.

We do not rank providers or quote charges, because both change. Our guide to how stocks and shares ISA charges add up over time covers costs.

Table of Contents

What counts as an investment ISA?

GOV.UK lists four types of ISA: cash, stocks and shares, innovative finance and Lifetime. Investment ISA is the everyday name for the two that hold investments. You must be 18 or over and resident in the UK to open one. Armed forces members and Crown servants living abroad, and their spouses or civil partners, can also qualify.

The 2026/27 limit is £20,000 across all your ISAs, however you split it. You do not pay tax on income or capital gains from investments held in an ISA, and the account stays open after the tax year ends, so your savings stay tax-free for as long as you leave them there.

What can a stocks and shares ISA hold?

GOV.UK says a stocks and shares ISA can include:

shares in companies
unit trusts and investment funds
corporate bonds
government bonds
long-term asset funds

Cryptoasset exchange traded notes cannot be held in a stocks and shares ISA unless you held them there before 6 April 2026. They need an innovative finance ISA. That is what the rules allow. Each provider chooses which of these it offers, so one may offer funds but no individual shares.

What can an innovative finance ISA hold?

GOV.UK says innovative finance ISAs include:

peer-to-peer loans, which are loans given to other people or businesses without using a bank
crowdfunding debentures, which means investing in a business by buying its debt
funds where the notice or redemption period means they cannot be held in a stocks and shares ISA
cryptoasset exchange traded notes

Long-term asset funds cannot be held in an innovative finance ISA unless you held them there before 6 April 2026. They need a stocks and shares ISA. You cannot transfer arrangements or investments you already hold into an innovative finance ISA. GOV.UK also says you can transfer cash out of one to another provider, but you may not be able to transfer other investments from it, so ask the provider how a move would work.

Can I put shares I already own into an ISA?

Not directly. GOV.UK says you cannot transfer non-ISA shares you already own into an ISA unless they come from an employee share scheme. GOV.UK lists shares that are not in an ISA among the assets you pay Capital Gains Tax on when you sell, so work out any gain before you sell.

What tax do you save inside an investment ISA?

Outside an ISA, gains and dividends can be taxed. For 2026/27, GOV.UK gives a Capital Gains Tax allowance of £3,000, with gains above it taxed at 18% within the basic rate band and 24% above it. GOV.UK gives a dividend allowance of £500, with dividends above it taxed at 10.75% for basic rate, 35.75% for higher rate and 39.35% for additional rate taxpayers. Neither applies to shares held in an ISA.

Here is GOV.UK’s own dividend example, worked through. You receive £3,000 in dividends outside an ISA and your income puts you in the basic rate band. The first £500 is covered by the dividend allowance. The other £2,500 is taxed at 10.75%, which is £268.75. The same £3,000 of dividends inside a stocks and shares ISA would carry no tax.

How do you choose a provider without a ranking?

Check these before you open one:

Is the firm authorised? The FSCS tells people to check that the provider is authorised by the Financial Conduct Authority or the Prudential Regulation Authority, and that the activity it does for you is regulated.
Does it offer the investments you want? Match its list against the two lists above.
What does it charge, and how? Ask for every charge on the account and the investments, in pounds for a sum like yours.
Can you transfer in and out? GOV.UK says transfers between cash ISAs should take no longer than 15 working days and other transfers no longer than 30 calendar days, and that a provider may charge for them. For innovative finance investments, ask the provider how long a transfer will take.
Is the ISA flexible? Your provider can tell you. In a flexible ISA you can take cash out and put it back in the same tax year without using up more of the allowance.

On protection, the FSCS can pay up to £85,000 per eligible person, per firm if an authorised firm fails. It cannot pay for poor investment performance, because the value of investments can go down as well as up. Its page also says protection varies by product and some investment products are not protected at all, so ask the firm to confirm.

What changes for investment ISAs in April 2027?

The HMRC factsheet and SI 2026/1018 change the rules for stocks and shares and innovative finance ISAs from 6 April 2027. The overall £20,000 limit and the limit for these ISAs stay the same. Three things change:

Interest on cash held in a stocks and shares or innovative finance ISA is no longer tax-free. The ISA manager pays a flat charge to HMRC, set at the savings basic rate, which is 22% for 2027/28 (Finance Act 2026, section 5).
A stocks and shares ISA cannot be 100% money market funds. A portfolio with some money market funds alongside other investments is allowed.
Money can no longer move from a stocks and shares or innovative finance ISA into a cash ISA unless you are 65 or over. Moves from cash into stocks and shares stay possible.

For the cash side of the change, see our guide to using your £20,000 allowance before April 2027.

Frequently asked questions

Which investments can I hold in a stocks and shares ISA?

GOV.UK lists shares in companies, unit trusts and investment funds, corporate bonds, government bonds and long-term asset funds. Cryptoasset exchange traded notes cannot be held there unless you held them before 6 April 2026. Your provider decides which of these it offers, so check its list.

What is an innovative finance ISA?

GOV.UK says it can include peer-to-peer loans, crowdfunding debentures (buying a business’s debt), funds that cannot sit in a stocks and shares ISA because of their notice or redemption period, and cryptoasset exchange traded notes. You cannot transfer investments you already hold into one.

Can I split my allowance between different ISAs?

Yes. GOV.UK says you can save up to £20,000 in one account or split it across several in 2026/27. Its example is £15,000 in a cash ISA, £2,000 in a stocks and shares ISA and £3,000 in an innovative finance ISA. The Lifetime ISA has its own £4,000 maximum inside the total.

Does the FSCS cover my investments in an ISA?

The FSCS says it can pay up to £85,000 per eligible person, per firm if an authorised firm fails and money or assets it holds for you are short. It does not pay for poor investment performance. Its page says protection varies by product and some products are not protected at all.

Is interest on cash in a stocks and shares ISA still tax-free?

Yes. The Autumn Budget on 28 October 2026 scrapped the planned 22% charge on interest on cash held in a stocks and shares ISA. Cash in the ISA stays tax-free, and you do not declare it on a tax return.

Do I need to put ISA income on my tax return?

No. GOV.UK says that if you complete a tax return, you do not need to declare any ISA interest, income or capital gains on it. You do not pay tax on income or capital gains from investments held in an ISA, so there is nothing to report.