ISAs

What is an ISA?

ISA stands for Individual Savings Account.

ISAs are accounts which can be used to hold many types of savings and investment products. They have replaced Personal Equity Plans (PEPs) from April 1999.

ISAs can include one or more components: cash (bank and building society savings accounts, National Savings & Investments) & stocks and shares (unit trusts, shares, bonds and so on). There are strict rules regarding the maximum amount allowed for each component and the overall amount you can invest in any one tax year.

Any UK resident over the age of 16 can buy a cash mini ISA. Any UK resident over 18 can buy any other sort of ISA.

What are the tax benefits?

With an ISA you can save up to £7,000 each year and not pay tax on the income you receive from your investment.

A tax year runs from 6 April to 5 April the following year.

Tax benefits of ISAs include:

No tax paid on the income you receive from your ISA savings and investments

No tax paid on capital gains arising on your investments.

You can take your money out at any time (but some types have a notice period) You do not have to tell the Inland Revenue and Customs about income and capital gains from ISA savings and investments.

 

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