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ISAs, or individual savings accounts, are a flexible, tax-efficient way to save or invest.
The benefits of the tax advantages depend on your personal circumstances and tax rules can change, however any income or growth from an ISA is free from personal liability to UK income and capital gains tax.
An ISA is a great way to make the most of your tax-efficient savings limit and save for the future.
At Mortgage Masters we can help you arange an ISA. Call us now at our Oxford office on 01865 744299 or complete our ISA Enquiry Form.
An ISA is not an investment itself. It is a wrapper surrounding your fund choice(s) that makes them more tax efficient.
When you make an investment in an ISA you pay no income or capital gains tax on the returns you receive, no matter how much your investment grows or how much you take out over the years.
You don't even have to mention your ISA on your tax return. Please be aware that the value of tax savings and eligibility to invest in an ISA will depend on individual circumstances, and all tax rules may change in the future.
You can normally either make regular monthly payments or a single payment; however there are annual limits on the amount you can pay in.
Your ISA allowance is set by the Government (HM Revenue & Customs) each tax year. The amount you can invest depends on your age and from 6 October 2009 if you are 50 or over, or reach 50 during the 2009/10 tax year, you can invest £10,200 in total.
You can invest up to £5,100 of that in a Cash ISA and the remainder in a stocks and shares ISA, or the whole amount in a stocks and shares ISA. If you are under 50 you can invest up to £7,200 in total for the 2009/10 tax year. You can invest up to £3,600 of that in a Cash ISA and the remainder in a stocks and shares ISA, or the whole amount in a stocks and shares ISA.
From 6 April 2010 the new ISA limit of £10,200 applies to everyone, regardless of age.
What kinds of ISAs are there?
- Stocks and shares
- Cash.
Stocks & shares ISAs are generally available to anyone who is 18 years of age or older and ordinarily resident in the United Kingdom for tax purposes. You should be prepared to leave money invested in the stocks and shares ISA for the medium to long term (at least 5 to 10 years).
Cash ISAs are usually provided by banks.
ISAs are very flexible, and can be suitable for any long-term savings need. They have no fixed investment term, though we believe that you should only consider investment in equities over a period of five years or more.
Each year you have the option to select how you would like to invest your ISA allowance, either in cash or stocks and shares, or a combination of both.
