ISAs

ISA stands for Individual Savings Account. On 6 April 2008, the rules for ISAs changed:

• The distinction between Maxi and Mini ISAs was removed – ISAs are either Stocks & Shares ISAs or Cash ISAs.
• PEPs have become Stocks & Shares ISAs
• TESSA only ISAs or TOISAs have become Cash ISAs
• Money held in Child Trust Fund (CTF) accounts will be able to roll over into an ISA once the child reaches the age of 18

The overall annual ISA subscription limit has increased from £7,000 to £7,200. All of the annual limit can be invested into Stocks and Shares ISA, or alternatively up to £3,600 can be invested in a Cash ISA and the remainder of the £7,200 subscription can be invested in a Stocks and Shares ISA.

ISAs are tax-efficient wrapper, which is the Government’s way of encouraging you to save. They offer the following benefits:

• You do not pay Capital Gains Tax on any profits made within the ISA
• With cash ISAs the interest is paid without the deduction of tax
• The ISA providers can reclaim 20% tax credit on interest payments received on fixed interest, corporate bonds funds and certain property funds
• Higher rate taxpayers do not pay the extra 22.5% higher rate tax on the gross dividends from shares
• There is no need to include your ISA details on your annual tax return

ISAs have proved highly popular as tax-free opportunities to invest and save on an annual basis, either through a lump sum investment or by monthly savings. When made monthly, it is important to review the position annually before the end of the tax year to avoid being committed to the same provider year on year.

Investment Warning:
Past performance is not necessarily a guide to the future and the value of units, and the income provided from them, can go down as well as up. You are not guaranteed to get back your original investment at any time.