ISAs
NB - Legislation relating to Individual Savings Accounts is subject to change.
Individual Savings Accounts (ISAs) are available to all UK residents over 18 years of age, 16 years of age for the Cash ISAs. They benefit all taxpayers, as any income or capital gains received from investments held within an ISA do not have to be declared to the tax man.
ISAs were introduced in 1999 and replaced PEPs and TESSAs, but if you have one of these accounts, you can keep PEPs indefinitely and TESSAs until maturity. Furthermore, if you have a maturing TESSA you can rollover the original capital (without accrued interest) into a TESSA only ISA without affecting your ISA allowance in that tax year.
ISAs can invest in cash or longer term investments like stocks and shares (including unit trusts, investment trusts, Open Ended Investment Companies, some fixed interest securities, or any share quoted on a stock exchange recognised by the Inland Revenue.)
In April 2008, the old Mini and Maxi ISA's disappeared and investors now have a choice between a Cash ISA and Stocks and Shares ISA.
Investment Limits
Changes in ISA rules for those 50 and over
If you are 50 or over you can put more money in both cash and stocks-and-shares ISAs from 6 October 2009. If you turn 50 between 6 October 2009 and 5 April 2010 you can top up any time from 6 October – you don’t have to wait till your 50th birthday.
The current ISA rules are:
- The annual investment allowance for those 50 and over is £10,200. Up to £5,100 of that allowance can be saved in cash with one provider. The rest can be invested in stocks and shares with either the same or a different provider.
- The annual investment allowance for those under 50 is £7,200. Up to £3,600 of that allowance can be saved in cash with one provider. The rest can be invested in stocks and shares with either the same or a different provider.
- From 6 April 2010 the annual investment will rise to £10,200 (of which £5,100 can be saved in cash) for everyone.
- You can invest in two separate ISAs each tax year – a cash ISA or a stocks and shares ISA.
- You can transfer money saved in a cash ISA to a stocks and shares ISA – but you can't transfer money the other way.
Cash ISA's - Cash ISA's are wildly available with different interest rates. It is a good idea to shop around for the best Cash ISA rates. It is important however to understand the conditions attached to those rates, for instance access may be restricted in order to achieve that particular rate. The limit for a cash ISA is £3,600 or £5,100 if you are aged 50 or older.
Stocks & Shares ISA- There is no upper limit on the stocks and share holdings this type of ISA. Your entire ISA allowance can be in stocks and shares. However if you hold a Cash ISA which you have taken out in the same tax year, you will be restricted to the difference between the overall ISA limit and what you have deposited in the Cash ISA. The Stocks & Shares ISA is one account and managed by one provider.
Read More : Self Select ISAs