ISAs
What is an ISA?
An ISA stands for Individual Savings Account. It is not an investment in itself; it is simply a tax-efficient wrapper which will allow you to invest directly in a range of investments such as shares, bonds or collective investment schemes.
ISAs were introduced by the Government to encourage more people to save. Investing in an ISA allows you to shelter your money from the taxman as you can keep all the proceeds that you receive from that investment without paying income or capital gains tax.
You don't even have to declare your ISA on your tax return. Tax assumptions are those currently applicable and are subject to statutory change.
The value of the tax advantages will depend on your individual financial circumstances.
The Financial Services Authority does not regulate Cash ISAs.
New tax year, new rules (April 2010)
- The ISA allowance has risen from £7,200 to £10,200
- You can now invest up to £10,200 in a Stocks and Shares ISA, or up to £5,100 in a Cash ISA.
Who is allowed to invest in an ISA?
To invest in an ISA you have to be aged 18 or over and ordinarily resident in the UK for tax purposes. You cannot hold an ISA jointly with a spouse or anyone else.
What are the tax benefits of an ISA?
Under current UK tax rules, all ISA investments are free of personal income and capital gains taxes. The value of the tax advantages will depend on your individual financial circumstances. ISA Managers cannot claim back tax credits on dividends.
How many ISAs can I have?
There are limits on the number of ISAs you can take out each tax year. You can only put money in either one Stocks and Shares ISA or split your allowance between one cash ISA and one Stocks and Shares ISA within limits previously mentioned.
However, you can still hold onto ISAs from previous tax years. So you may end up with several ISAs.
The Financial Services Authority does not regulate Cash ISAs.
