Individual Savings Accounts (ISAs)
These are tax efficient investment vehicles.
It is important to understand that they are all different. They can range from the most speculative of shares in emerging economy stock markets, to cash in the Bank.
However the Government favours the use of ISAs for equity based investments (stocks and shares), (hence the lower limit for Cash ISAs).
The aim when using ISAs is to move your investments from a taxed environment into a more tax efficient environment, and to ensure that new investment funds are invested, from the outset, in a way that minimises tax.
Investment Limits*
£10,680, of which up to £5,340 can be saved in a Cash ISA.
New - Junior ISAs
From 1 November 2011 Junior ISAs will offer parents a tax-free way to save for their child’s future.
The features of the Junior ISA are:
- people will be able to put money into a cash account or ‘stocks and shares’ account
- each child will be able to have one cash and one ‘stocks and shares’ Junior ISA at any one time
- there will be a total yearly limit of £3,600 for all payments into these accounts
- accounts will become ISAs when the child is 18
- the accounts will belong to the child and they are not able to get the money out until they are 18
- any money the accounts make will be tax free
- a range of banks, building societies, credit unions, friendly societies and stock brokers will offer Junior ISA accounts
Note - children who have a Child Trust Fund account will not be able to have a Junior ISA.
Historic Notes (pre April 2008 ISAs and PEPS).
Any existing pre-April 2008 ISA is now just an ISA, and any PEP is now an ISA.
* Tax year 2011-2012.
Last updated on October 13, 2011