An Individual Savings Account (ISA) allows anyone aged 18 or over to save up to £11,280 (for 16 and 17 year olds this is £5,640 cash) each year and not pay tax on the income you receive from the investment. Junior ISA’s are available for those under 18 to invest up to £3,600.
They are now a permanent feature of the savings landscape.
Tax Advantages of ISAs.
- All income from the ISA is received tax free and does not need to be declared on a Tax Return.
- There is no capital gains on the investment.
- Money is not locked in by the tax rules although some accounts will have notice periods. However, if you withdraw funds you will only be able to re-invest later in the same tax year up to the balance remaining on your investment limit.
- They are not reportable to HMRC.
Cash ISAs and Stocks & Shares ISAs.
An ISA can be made up of an investment in cash, or longer term investments like stocks and shares or insurance.
Up to £5,640 of the £11,280 limit can be saved in a cash ISA with one provider.
The balance can be invested in stocks and shares, either with the same or an alternative provider. Therefore you can either invest up to the £11,280 limit in equities or up to £5,640 in cash and £5,640 in equities.
Transferring an ISA.
You can transfer your ISA to another ISA manager if it is the same type of ISA. For example, you can’t move funds from a cash ISA with one manager to a stocks and shares ISA with another.
You cannot do this yourself by closing one and paying the money to another ISA manager. The transfer must be directly between the existing ISA manager and the new one and in some cases there may be a charge for transferring.
How We Can Help You.
Please contact us if you would like further information on ISA’s.