Guide To ISAs
Guide To ISAs
If you are thinking of getting an Individual Savings Account (ISA) but are not sure which one will best for your circumstances, our guide to ISAs can help. Below is everything you need to know about ISAs in simple and easy to understand language.
FREE Brochure on Managing your ISA funds
Guide to ISAs: What is an ISA?
ISAs were launched in 1999 and are savings accounts that allow you to save money without having to pay tax. You may invest up to £7,200 per year in an ISA (depending on which type of ISA you choose – see below) and do not have to pay tax on it, so you receive everything that investment gains, which is different from a normal bank account.
Guide to ISAs: What are the different types of ISA?
There are two types of ISA:
You can pay into one of each type – a Cash ISA and Stocks and Shares ISA – during a tax year, but the combined investment must not exceed £7,200 per tax year.
Guide to ISAs: What were Maxi and Mini ISAs?
On April 6 2008, Mini and Maxi ISAs were scrapped and replaced by Cash ISAs and Stocks and Shares ISAs, and the tax free allowance for every UK adult was raised from £7,000 to £7,200.
Previously, you could invest up to £3,000 of your £7,000 allowance into cash, either in a Mini Cash ISA, which has a maximum investment of £3,000, or into a Maxi ISA.
A Maxi ISA was a tax free account with two components; cash, and stocks and shares. Within the same account you could invest up to £3,000 in cash and the remainder in stocks and shares, or you could choose to invest the entire £7,000 allowance into stocks and shares.
The other type of ISA was a Mini Stocks and Shares ISA, in which you could invest a maximum of £4,000 per tax year.
You could pay into either a Maxi ISA, or both a Mini Cash and a Mini Stocks and Shares ISA during one tax year, provided you did not exceed the limit of £7,000.
Guide to ISAs: What happened Maxi and Mini ISAs?
On April 6 2008;
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All Mini Cash ISAs, the cash components of Maxi ISAs and TESSA Only ISAs were automatically reclassified as Cash ISAs
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All Mini Stocks and Shares ISAs, the stocks and shares components of Maxi ISAs and PEPs were automatically reclassified as Stocks and Shares ISAs.
Guide to ISAs: Why get an ISA?
- The benefits of ISAs are:
- You pay no tax on income arising from your ISA
- You pay no tax on any capital gains arising on your ISA
- If you have an ISA backed life insurance policy, your insurer does not have to pay tax on income and capital gains on investments used and you pay no tax when the policy pays out.
- You do not have to declare any income or capital gains arising from your ISA.
Guide to ISAs: Can I have an ISA?
- You have to be 16 or over to open a Cash ISA
- You have to be 18 or over to open a Stocks and Shares ISA.
- You must be a resident in the UK.
ISAs explained: Where can I get an ISA?
For a selection of the latest ISA deals, get your FREE ISA Brochures or see the table below:
Alternatively click on isa advertising links below:
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Please bear in mind that:
Investment ISAs are designed as medium to long term investments, for example at least five years.
The value of your investment and the level of any income received from it can fall as well as rise and is not guaranteed and you may not get back the amount of your original investment.
The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.
If you choose an index-tracking trust which invests overseas, exchange rate variations may cause the value of your investment to increase or decrease.
If you unsure what Investment ISA plan is right for you speak to an independent investment adviser.