ISAs
- Savings and Investment
About ISAs ( Individual Savings Accounts)
What
is an ISA?
An
Individual Savings Account (ISA) is a tax-advantaged means that
investors may save and invest without incurring income or capital
gains taxes on the proceeds. An ISA is not an investment in itself,
so you shouldn't say "I've invested in an ISA", or "What
is the best-performing ISA?" What you should say is "What
can I invest in using the ISA wrapper?"
You
can invest in a combination of the following assets:
- cash
deposits
- stocks
and shares
- life
assurance investments
Cash Deposits
Qualifying investments include bank and building society deposits,
and money market unit trusts. Some National Savings products are
included as well as a range of existing bonds and accounts on which
tax is normally payable.
Stocks
and Shares
The equity element in an ISA may include any authorised unit or
investment trust or open ended
investment company (OEIC), and any share quoted on a stock exchange
recognised by the Inland Revenue. You can also include direct holdings
of gilts, bought with at least five years to go to maturity. There
are no global investment restrictions. You could invest your full
annual allowance in a fund that invests in the US, Europe or global
technology stocks. But this does not apply in the case of "CAT
marked" stocks and shares ISAs.
Life
Insurance
investments such as with profits bonds and unit-linked life insurance
funds are all eligible. If you have a mature Tax
Exempt Special Savings Account (TESSA), you have six-months
in which you may transfer the matured contributions into an ISA
without affecting your annual ISA allowance.
What
are the tax benefits of an ISA?
With an ISA you are allowed to invest up to £7,000 on a tax-efficient
basis each year. There is no tax relief on money put into ISAs on
entry, unlike contributions to a pension scheme. You are not liable
to pay income or capital gains tax on the proceeds of an ISA and
the investments you hold within an ISA grow free of income and capital
gains tax. Investments held within ISAs are not liable for capital
gains tax.
List
of ISA Providers
OCIS
provide general financial information, we urge you to consult an
Independent
Financial Adviser ( IFA )
before making any important decisions about your finances. |
