What is an ISA?
An Individual Savings Account
(ISA) is a tax-efficient way to save or invest. UK residents aged 16 and over
can choose to save in a cash ISA or if they are 18 or over, a stocks and shares
ISA or a combination of both. Parents or guardians could also open a Junior ISA
for children under 18.
The interest on cash ISA isn't
taxed, so you get to keep all the interest you earn. With a stocks and shares
ISA, all gains are free from capital gains tax; you don't even need to declare
your ISA investments to the tax man.
The beauty of ISAs is that they
don’t end when the tax year does. You take it with you into the new tax year
meaning each year you get the tax benefits on the cumulative amount. You can
keep adding to your ISA and the sooner you do this in the new tax year the more
you maximise the tax benefits ISAs give you.
What is the ISA limit?
Each tax year you have an ISA
allowance, for tax year 2013/2014 (6 April 2013 until 5 April 2014) your
allowance is £11,520.
You can save up to £5,760 in a
cash ISA with the remainder in a stocks and shares ISA, or, you
can invest your full allowance in a stocks and shares ISA.
