|
Individual Savings Accounts (ISAs) are tax-free Savings accounts which means individuals do not have to declare any income or capital gains they receive to the Taxman. Individuals can save up to £7,000 each financial year until 2005/2006. From then on the maximum amount you can invest each financial year is £5,000. A financial year runs from 6th April until the 5th April the following year.
Types of ISAs
There are three types of ISAs - Maxi ISA, Mini ISA and TESSA only ISA. An individual can only contribute to either one Maxi ISA or up to two Mini ISAs each tax year. Money cannot be invested in both a Mini and Maxi ISA in the same financial year.
Maxi ISA
Individuals can invest money in up to three different components (Cash, Stocks & Shares and Life Assurance) for each Maxi ISA. A stocks & shares component must be chosen, but the Life Assurance and Cash component are optional. A maximum of £7,000 can be invested each financial year. This can be divided between the three options in whichever way an individual wishes. See table below for investment options and limits.
Mini ISA
Individuals can only invest in one component of a Mini ISA each financial year. Unlike the Maxi ISA, the amount you can invest is fixed for each component. See table below for investment options. Click here to compare Mini Cash ISAs. For the risk averse or for those only wanting a Cash ISA from a building society or bank this will be the favoured option. Another advantage of a Mini ISA is that it provides greater flexibility allowing individuals to invest in a Cash ISA with, say, a building society and a Mini Stocks and Shares ISA with a company that specialises in equities (however as can be seen from the chart below this limits the amount you can invest into stocks and shares to a maximum of £4,000 - it could be higher in a Maxi). The insurance mini-ISA is no longer available.
TESSA only ISA
This account can only be opened with the capital from a matured TESSA. The account must be opened within six months of the TESSA maturing. The interest and any bonuses received must be paid to a different account when the account matures. The maximum amount that can be invested each financial year is £9,000. This limit is in addition to the ISA subscription limits on other ISA products each year.
CASH ISAs
Like regular savings accounts, some providers offer different types of Cash ISAs. Some providers will offer instant access to money with no penalty or loss of interest. Some other providers have restrictions, such as a fixed term or require notice to be given before money can be withdrawn. If a withdrawal is made within a fixed period then a penalty or loss of interest may result.
|
DIRECTORY
LOAN POINT
