Individual Savings Accounts (ISA)

Individual savings accounts (ISAs) were introduced in April 1999. They replaced Tessas and Peps and are effectively a tax wrapper within which investors may hold a range of different investments. The big advantage of ISAs is that interest & capital gains are tax-free: gains on investments held outside an ISA are liable to income tax and/ or capital gains tax.

Savers under the age of 50 can invest up to £7,200 in a single tax year – the over-50s can invest up to £10,200. This was announced in the 2009 Budget and the over-50s will be able to invest their extra allowance from October 6th 2009. This higher limit will apply to all savers from April 6th 2010.

The tax year runs from April 6th to April 5th and it is important to use as much of your annual allowance as you can within that time as it cannot be carried over into the next financial year.

ISAs were introduced in April 1999, so those who have made full use of their annual allowances every year since then, will have sheltered £79,400 from the taxman (£82,400 if you're over 50 and qualify for the new higher limit) – including the new 2009-2010 allowance. And that figure doesn’t include capital growth, so many people will have ISA investments worth far more than that, depending on where their money is invested.

You can open one cash ISA and one stocks and shares ISA each tax year. Up to £3,600 can be invested in a cash ISA. (£5,100 for the over-50s as of October 6th 2009). The remainder of your allowance can be invested in a stocks and shares ISA. Alternatively, you can just open a single stocks and shares ISA and invest the full amount in that.Various non-cash assets can be held within a stocks and shares ISA. These include unit trusts, open ended investment companies (oeics), investment trusts, exchange traded funds, shares or bonds.

Contact Us for independent financial advice on all aspects of savings, investment and wealth management. We are based in Wye and serve Ashford Maidstone Canterbury Kent the South East & indeed nationally.