ISAs

Individual Savings Account (ISA)

ISAs represent a tax-efficient container into which to place cash savings and investments in equities, bonds and collectives.

Introduced in 1999 as a replacement for PEPs and TESSAs, an ISA is available to all UK resident individuals over the age of 16. Designed to encourage new saving they are attractive to investors seeking a tax-efficient investment vehicle with the potential for higher returns. There is usually a low level of minimum subscription and no minimum period of investment.

An ISA enables you to accumulate savings in a tax efficient manner as all gains are free from tax, making them particularly attractive to higher rate taxpayers.

An ISA can contain cash deposits, investments in equities, bonds and collectives. Currently, the maximum subscription into ISAs is £10,200 for people aged 50 or over and £7,200 for everyone else in any one tax year. An individual can invest in two separate ISAs covering Cash, (maximum £5,100 for people aged 50 or over and £3,600 for everyone else), and Stocks and Shares, (maximum £10,200 for people aged 50 or over and £7,200 for everyone else, less what has been invested in cash). From 6 April 2010, the ISA limit will increase to £10,200, up to £5,100 of which can be saved in cash, for all ISA investors.

Withdrawals from an ISA can be made at any time without loss of tax relief.

Equity investments do not include the same security of capital which is afforded with a deposit account.

Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor.

The value of your investment can go down as well as up and you may not get back the full amount invested.