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ISA qualifying investments

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Phone icon Last updated 9 December 2020

This site is for UK investment professionals only. If you're not an investment professional, please find out more about us at vitality.co.uk.

Key points

  • A stocks & shares ISA can hold a wide range of permitted investments including shares and regulated funds 
  • Unlisted shares and funds that are not approved by the Financial Conduct Authority (FCA) are not permitted within an ISA
  • Insurance policies can also be held in an ISA subject to certain criteria
     

Individual Savings Account (ISA) - Qualifying Investments

Investors can place a number of different types of investment within their ISA. While cash ISAs are specifically designed to hold cash, stocks and shares ISAs can hold an array of different investment vehicles, including shares, funds, bonds etc.

Below is a list of the investments that can be placed inside a stocks and shares ISA, as well as an overview of some investments that cannot be placed in ISAs.

This list is meant to give a flavour of the types of investment vehicles and is not meant to be exhaustive. 

1. Eligible investments

The investments listed below are HM Revenue & Customs (HMRC) approved to be placed within a stocks and shares ISA:

  • Life insurance policies;
  • Shares issued by companies officially listed on a recognised stock exchange;
  • Corporate bonds issued by companies officially listed on a recognised stock exchange;
  • UK government bonds (gilts); 
  • Funds (unit trusts, OEICs, ETFs and UCITS), which are authorised by the FCA;
  • Units or shares in non-UCITS retail schemes authorised by the FCA;
  • Shares in investment trusts; and
  • Shares from an HMRC-approved employee share scheme.
The VitalityInvest ISA currently only allows investments in unit-linked insurance policies, whose values are linked to the value of underlying funds (FCA authorised unit trusts, OEICs and UCITS funds).

2. Investments that are not ISA eligible

While it may seem as if there is no limit on what can be invested within a stocks and shares ISA, it is important to be aware that some products are not ISA-eligible.
  • Shares that are not held on a recognised stock exchange. 
  • Funds and Exchange Traded Funds that are not authorised by the FCA also cannot be included in ISAs.
  • Warrants, futures and options cannot be held in ISAs. 

3. Life insurance policies

A policy of life insurance is eligible to be included in an ISA where the following conditions have been met:
  • The policy is on the life of the investor;
  • The policy’s terms and conditions state that:
    - the policy may be owned or held only as a qualifying investment for an ISA;
    - the policy shall terminate automatically if it ceases to be owned or held in the ISA;
    - the policy cannot be transferred to the investor;
    - the policy is not capable of assignment (other than that the policy may be transferred from one ISA manager to another in accordance with the normal rules on ISA transfers), and any interest in the policy may vest in the personal representatives of a deceased investor; and
  • The policy falls within paragraph I or III of Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

Important Information

The information provided is based on our current understanding of the UK legislation and may be subject to amendments as a result of changes in legislation.

All references to taxation are based on our understanding of current UK taxation law and may be affected by future changes in legislation, the individual circumstances of the investor and pension scheme conditions.

The information provided in this article is not intended to offer advice.

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