(ISAs): Individual Savings Accounts (ISAs) are tax-free savings accounts enabling individuals
to save up to £7000 per financial year. (6th – 5th April). To open an ISA you must be 18 years
old or over and a British resident. British citizens working abroad and their families may also be entitled
to open ISA’s and for more information click the link below. Individuals aged 16 and over can open
a Mini Cash ISA or the cash component of a maxi ISA.
Both Maxi and Mini ISAs are made up of two components; Cash and Stocks & Shares:
Cash:
Allows individuals to invest in authorised Bank and Building Society deposits and National Savings
(amongst others). Cash ISA’s will pay the full amount invested back at the end of the term as well
as interest and funds are more accessible - be wary of penalties.
Internet only accounts often represent good value. Money Jungle monitors
deals available online. See the
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Stocks & Shares:
This component allows individuals to invest in stocks and shares over a longer and fixed period. Typical
investments are shares through a registered index and collective investments such as unit trusts. There
is no guarantee that the investments will rise in value and if they don’t, you will only receive
back the amount of your original investment.
Maxi-ISAs allow you to invest
up to £7000 in the stocks and shares component or up to £3000 in the cash component. The maximum
per individual per year cannot exceed £7000 so this has to be taken into account if you mix your
investment.
In a mini-ISA, up to £4000 can be invested in stocks and shares and up to £3000 in
a mini-cash ISA.
ISA Regulatory Changes
From the 6th April 2008 there are some regulatory changes to ISAs
- Mini & Maxi ISA rules will disappear
- Any maxi or mini ISA will simply be called an ISA
- Any maxi cash component will become a cash ISA
- Any mini cash ISA will become a cash ISA
- Any maxi or mini stocks and shares component will become a stocks and
shares ISA
- The yearly overall limit increases from £7,000 to £7,200, with the
yearly cash limit increasing from £3,000 to £3,600
- The full £7,200 allowance can be invested in stocks and shares
- PEPs will become stocks and shares ISAs
- TESSA only ISAs will become cash ISAs
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