UK Individual Savings Account (ISA) When Living Abroad

UK based Individual Savings Accounts (ISA) are an onshore tax free investment vehicle available to anyone over the age of 16 who is resident and ordinary resident in the UK or in the service of the Crown and paid out of public revenue if based overseas or married to such an individual.

When living abroad a former UK resident is no longer eligible to take out an ISA and their situation in respect of any Individual Savings Accounts they already hold changes.  This article is a guide to the treatment of UK Individual Savings Account (ISA) when living abroad.

ISAs were introduced at the start of the tax year in 1999 and, as mentioned, are an onshore tax efficient savings policy available to all UK residents aged 16 or over and into which up to GBP 7,000 a tax year can be saved.  (Please note that the UK tax year runs from April the 6th to April the 5th the following year).

A qualifying individual can take out either a single maxi ISA or up to three mini ISAs in any one tax year.  If the individual prefers the latter option then s/he can take out only one of each type of mini ISA which are a stocks and shares or a cash or an insurance mini ISA.

Any income or capital gain generated from the investment of the ISA is 100% tax free and you don’t even have to inform the Inland Revenue of any income and gains you receive.  Basically this type of tax free savings vehicle was introduced by the British Government to provide an incentive to make more people save more money onshore.

If you’re going to live abroad and you already have an ISA then you can put up to the maximum amount allowed in any one tax year into the investment account before you leave, but once you become non-resident you cannot continue contributing to your Individual Savings Accounts.  While you remain overseas your ISA will still be entitled to the tax breaks as detailed above, but for the duration of your period of non-residence your ISA cannot be invested into.

If you move back to the UK and become resident and ordinary resident once more you can restart your savings and even open new ISAs.

If you’re UK domiciled but you already reside overseas and are classed as non-UK resident you cannot open an ISA.

If you are unsure of your status or that of any Individual Savings Account (ISA) that you already hold you can contact the Inland Revenue’s ‘Centre for Non-Residents’ - call 0845 070 0040 if you’re in the UK or +44 151 210 2222 if you’re already living abroad.