What is an ISA and how do I get one ?
If you pay income tax and have some spare money to save or invest you should know about Individual Savings Accounts (ISAs). ISAs have been available since April 1999, and they offer an attractive tax-free option to anyone aged 16 or over. Junior ISA’s (JISA’s) are available to those aged under 16.
ISAs have replaced TESSAs which in turn had replaced PEPs (Personal Equity plans)
What makes them different from normal savings accounts?
With standard bank and building society savings accounts, taxpayers normally have to pay tax on any interest earned on their money. The tax is deducted from the interest before it is paid out, reducing the amount received. Similarly, tax must be paid on the income and profits made from investments in the stock market, like company shares or unit trusts.
However, ISAs are a kind of 'wrapper' to protect savings from tax, allowing you to put away a maximum of £11,280 (by way of regular or single savings amounts) each tax year, in a range of savings and investments. You pay no personal tax at all on the income and/or profits received.
Tax savings
If you’ve taken full advantage of your allowance since ISAs began you’d have avoided a massive amount of your money from being taxed so far!
• You don’t pay any personal tax (income or capital gains) on any investments
• You don’t need to include the income and gains from ISAs on your tax returns
• You can take money out of your ISA at any time without losing your tax benefits
Taking out an ISA
ISA’s are readily available from all over the place. It is handy to get some advice on which type of ISA best suits you before you commit to one, as this could be the difference between a good return and a not-so-good return. The easiest thing to do is to talk to someone at your bank. They will be able to give you useful advice on your plan.
You can compare ISA’s online too, looking at different rates and fees associated with them, in order to make a self-informed choice on your plan.
Share this..
Related stories
UK government looking to reduce tax incentives for ISAs
The UK government is believed to be considering a reduction in the number of tax incentives connected to ISAs which have proved to be very popular amongst UK investors. While initially ISA accounts were deemed to be the property of the rich and famous they have in fact been used as tax efficient investment vehicles for many people in the UK. Indeed many ISAs have taken over from the traditional re...
Read MoreConsumers urged to check accessibility of ISAs
Consumers have been warned to check how they will be able to access their mini cash ISA by Abbey.Recent research by the bank found that around one-in-five so-called 'easy access' accounts only allowed customers to access their money by one method.This lack of accessibility might come as a surprise to some customers, who are used to having a variety of methods at their disposal by which to manage t...
Read MoreThousands take to new Junior ISA’s
The results of a survey from Hargreaves Lansdown have revealed that 72,000 Junior ISA (JISA) accounts were opened in the first five months since the launch of the product in November 2011. This led to £116m being invested in total, and the average account containing £1,614. The way in which JISA’s have been managed has also been scrutinised, and the results show that 89pc invest in lum...
Read MoreInvestors shun Isas
The traditional rush during March to take advantage of the tax-free allowance offered by Individual Savings Accounts (Isas) did not materialise this year, new data shows.Figures from the Investment Management Association reveal that in the period between March 1st and April 5th just £532 million worth of the savings accounts were sold. This is nearly half the figure of £957 million recorded last...
Read MoreUS government to introduce £9 fee for electronic visas
Visitors to America will face an additional £9 fee from the US authorities from 8 September as the government looks to raise money for the American tourism industry. The fee will affect visitors from 36 nations as well as those who apply for the electronic system for travel authorisation which was put in place after 9/11. There are concerns that the US authorities are looking to milk overseas vis...
Read More