ISAs
NB - Legislation relating to Individual Savings Accounts is subject to change.
Individual Savings Accounts (ISAs) are available to all UK residents over 18 years of age, 16 years of age for the Cash ISAs. They benefit all taxpayers, as any income or capital gains received from investments held within an ISA do not have to be declared to the tax man.
ISAs were introduced in 1999 and replaced PEPs and TESSAs, but if you have one of these accounts, you can keep PEPs indefinitely and TESSAs until maturity. Furthermore, if you have a maturing TESSA you can rollover the original capital (without accrued interest) into a TESSA only ISA without affecting your ISA allowance in that tax year.
ISAs can invest in cash or longer term investments like stocks and shares (including unit trusts, investment trusts, Open Ended Investment Companies, some fixed interest securities, or any share quoted on a stock exchange recognised by the Inland Revenue.)
In April 2008, the old Mini and Maxi ISA's disappeared and investors now have a choice between a Cash ISA and Stocks and Shares ISA.
Investment Limits
The annual ISA limit for the 2009/2010 tax year is £7,200, of which up to £3,600 can be placed within a Cash ISA. From 6th October 2009 however, if you are aged 50 or older, this overall limit will go up to £10,200 of which up to £5,100 can be cash. Everyone else will be able to benefit from this allowance increases from April 2010.
Cash ISA's - Cash ISA's are wildly available with different interest rates. It is a good idea to shop around for the best Cash ISA rates. It is important however to understand the conditions attached to those rates, for instance access may be restricted in order to achieve that particular rate. The limit for a cash ISA is £3,600 and from 6th October 2009 £5,100 if you are aged 50 or older.
Stocks & Shares ISA- There is no upper limit on the stocks and share holdings this type of ISA. Your entire ISA allowance can be in stocks and shares. However if you hold a Cash ISA which you have taken out in the same tax year, you will be restricted to the difference between the overall ISA limit and what you have deposited in the Cash ISA. The Stocks & Shares ISA is one account and managed by one provider.
Read More : Self Select ISAs