| ISA
Investments - Individual savings accounts |
A
tax efficient wrapper for individual investment.
Flexibility:
In either case you can contribute when you like,
and take your money out when ever you like.
Who qualifies: You
have to be 18 or over (16 for a cash iSA) and
UK Resident for tax purposes, (strictly speaking
Resident and Ordinarily Resident), and/or a Crown
employee paid by the Government while working
overseas, (e.g. diplomats and armed forces).
All ISAs are owned by an individual. No joint
ISAs, no ISAs held on behalf of others, (though
there is nothing to stop you setting up an ISA
in your own name and handing the proceeds to someone
else, e.g. a child, in the future).
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Charges
and CAT standards:
Plan managers can impose any terms or charges that
they like (as they can with any investment), but those
that meet certain criteria laid down by the Government
for low Charges, easy Access and fair Terms can claim
to meet the CAT Standards. While this is a useful
standard it has the effect of limiting the options
open to the Plan Manager. It is important that you
are sure that you want your ISA to operate within
these restrictions. They could result in your fund
performance being lower than otherwise. See CAT Standards
- Uses and Limitations.
Transferring funds between ISAs:
Broadly speaking you can transfer funds between managers
whenever you want, but see the Maxi and Mini details
below. Also plan managers are free to impose restrictions
and terms on transfers.
When transferring money invested in previous years
you can move it in whole or in part.
When transferring money invested this year you must
transfer ALL of the money invested to the new ISA.
Tax aspects:
There is no income tax on any income, or capital gains
tax on any gains. (Corollary - no CGT losses within
the ISA can be used to offset gains outside it). Life
policy proceeds are tax free.
There is no need to tell the Inland Revenue anything
about your ISAs. You don't even have to tell them
that they exist.
ISAs end on death, and their value at that time IS
included within your estate for Inheritance Tax purposes.
ISAs come in two main forms - Maxi and Mini, plus,
for the moment TESSA ISA.
Maxi ISA
Always use a Maxi ISA if you want to invest more than
£3000 in stocks and shares that year.
You can invest up to £7000pa, The funds can
be invested in Stocks and Shares, or, if you prefer,
up to £3000 can be invested in Cash, and £1000
in Life Assurance,
The monies invested in one component must stay with
that component until cashed in, even if you transfer
to another plan manager.
You can contribute to only one Maxi ISA each tax year.
Be it new or existing.
The Maxi ISA funds have to stay with one plan manager
for ALL their components, (ie if you choose ABCLife
Maxi ISA for their unit trusts, then your cash element
has to stay with whatever ABCLife are offering).
You cannot contribute to a Maxi ISA if you have already
contributed to a Mini ISA in that year.
Mini ISA
Mini ISAs come in three types:-
Stocks and Shares, maximum £3000.
Cash, maximum £3000).
Life Insurance, maximum £1000.
You can contribute to one of each, each tax year,
but not if you have already contributed to a Maxi
ISA.
You can place each Mini ISA with a different plan
manager.
The best way to think of you investments is as your
Equity ISA, your Cash ISA and your Life ISA, and never
the twain shall meet. I.e. if you transfer your Cash
ISA to a new manager it can only go into that managers
Cash ISA. To move funds from a Cash ISA to an Equity
one can only be done by cashing in the Cash ISA and
treating the investment into an Equity one as new
money.
TESSA ISA
When your TESSA matures you can use the capital element
(not any interest) to invest in special TESSA only
ISA, a Cash Mini ISA or the cash component of a Maxi
ISA.
Any investment is in addition to your normal annual
ISA limit
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Great British Finance
Limited are authorised and regulated by the
Financial Services Authority (FSA). The FSA
does not regulate some forms of Mortgage, Inheritance
Tax Planning, Credit Cards, Personal Loans,
Deposit Accounts & Insurance. If you are
submitting an online request, we would advise
to read our KeyFacts statement, links are at
the top and bottom of this page. |
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