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Individual Savings Accounts (ISA’s)
With an ISA you can currently save up to £7,200 each year and not pay UK tax on the income you receive from your investment. The limit is being increased to £10,200 from October 6th 2009 for indivduals aged 50 and over, and for all investors from April 6th 2010.
Types of ISA - Cash or Stocks and Shares
An ISA can be made up of an investment in cash, or investments like stocks and shares or insurance. Individual savers are able to invest in two separate ISAs in any one tax year: one cash ISA and one stocks and shares ISA.
Investment Limits
For cash ISAs, you can invest up to £3,600 a year (£5,100 under the increased limit), and can only invest with one provider in any one tax year.
For stocks and shares ISAs, you can invest up to £7,200 a year (£10,200 under the increased limit), and can only invest with one provider in any one tax year.
For stocks and shares ISAs, you can invest up to £7,200 a year (£10,200 under the increased limit), and can only invest with one provider in any one tax year.
You can invest in both a cash ISA and a stocks and shares ISA in the same tax year. In this case, the separate limits for each type of ISA will still apply and you cannot invest more than £7,200 ( £10,200 under the increased limit) in total. Your cash ISA and stocks and shares ISA can be with either the same or with different providers.
Transferring an ISA
You can transfer your cash ISA to another ISA manager, either into another cash ISA or into a stocks and shares ISA.
You can transfer your stocks and shares ISA to another ISA manager, but only into another stocks and shares ISA. You cannot transfer a stocks and shares ISA into a cash ISA.
You can transfer your stocks and shares ISA to another ISA manager, but only into another stocks and shares ISA. You cannot transfer a stocks and shares ISA into a cash ISA.
You are able to transfer some or all of the money saved in previous tax years without affecting your annual ISA investment allowance.
Tax Benefits of ISA’s
No tax payable on the income you receive from your ISA savings and investments.
No tax payable on capital gains arising on your investments.
You can take your money out at any time (but some types have a notice period).
You do not have to tell HM Revenue & Customs about income and capital gains from ISA savings and investments.
If you do invest in more than one ISA of the same type in a tax year, the second ISA will not be tax-advantaged.
Moving Abroad
You can only subscribe to an ISA if you are resident and ordinarily resident in the UK for tax purposes. Overseas residents are not eligible to apply for an ISA.
If you cease to be a UK resident while you already have an ISA open, you will no longer be able to put money into it. However, you will still be able to keep your ISA open and you will still be entitled to the tax benefits on investments held in the ISA. If you then return to be UK resident and ordinarily resident, you can start putting money in again.
Crown Employees Overseas
If you are a crown employee, such as a diplomat or a member of the armed forces, and you are working overseas and paid by the Government, you are entitled to open an ISA. You can continue to invest in your ISA while you are overseas. This also applies to your husband, wife or civil partner.
If you wish to discuss the above further or require information on any of our services, then please contact us.
Any reference to legislation and tax is based on FPP’s understanding of