ISAs

ISA stands for Individual Savings Account, a tax-efficient wrapper which sits over your choice of a number of different investments to shelter them from further tax on any income or gains earned.

The overall level of investment is restricted to £10,200 each year. You may choose to invest in two separate ISA’s each tax year; a cash ISA and a stocks and shares ISA. You can invest up to £5,100 in a cash ISA with one provider. The remainder of the £5,100 can be invested in stocks and shares with either the same or a different provider. For example, you can chose to save £1,000 in a cash ISA with one provider, and £9,200 in a stocks and shares ISA with a different provider. Alternatively, you can invest a maximum of £10,200 in a stocks and shares ISA if you have not invested any money in a Cash ISA. Any unused ISA allowance cannot be rolled over to the following year. It is possible for you to make withdrawals from your ISA at any time without loss of tax relief. However, once the maximum amount has been subscribed to an ISA in a year, no further investment will be allowed that year, regardless of how much is withdrawn.

You must be aged 16 or over and a UK resident to start a cash ISA, and aged 18 or over and a UK resident to start a stocks and shares ISA. ISA’s may not be written on a joint life basis or in trust.

An ISA is intended as a medium to long-term investment. If you withdraw from an ISA in the early years you may not get back the amount invested. Because ISA investments can go down as well as up you may not get back the amount invested. Periods of high inflation may erode the value of your ISA depending on the growth rate achieved.