Guide to what is an ISA?
An ISA is an Individual Savings Account. They were launched in 1999 and are a tax efficent investment. They are open
to anyone over 18 or over 16 for a cash isa.
The government changed the system in April 2012 and you are allowed to invest
upto £11,280 between cash and stocks/shares ISA's.
You are allowed 1 Cash ISA upto a maximum value of £5,640 each tax year with
the option of investing the rest in a stocks and shares ISA. or you could invest up to the entire £11,280 in a
stocks and shares ISA.
If you remove any funds from an ISA account in a tax year e.g pay £5,100 into a cash ISA then remove £1000
from it you are not allowed to replace the funds removed in the ISA account so think carefully before cashing in as the
tax savings on the amount removed will be lost forever.
There is no personal income tax (income or capital gains) on any ISA investment.
Normally a basic rate taxpayer has to pay 20% of any interest earned in tax and a higher rate tax payer 40% but in an
ISA the tax payable is zero.
No requirement to include in
You are not taxed on the funds you remove
from an ISA account.
When can i invest in an ISA?
Each tax year you get a new ISA allowance 6th April until 5th April. If you
do not use your ISA allowance in any one year you have lost the allowance for that tax year forever.