Which ISA account is best for your money?
Individual Savings Accounts (ISAs) were introduced in 1999 and are designed for investment and savings purposes given their favourable tax status – All income and capital gains are tax fee and there are no charges!
Like an ordinary savings account, an ISA is opened with a cash deposit. However, with an ISA, you will have tax-free savings.
Alternatively, an ISA can contain a stocks and shares component, where the money is invested in qualifying investments, such as the stock market or government / corporate bonds. Consequently, the risk profile of the ISA may be anything from low to high.
There are currently 2 types of ISA, a mini ISA and a maxi ISA. Up to £3,000 cash and £4,000 stocks and shares can be invested in a mini ISA and £3,000 cash and £7,000 stocks and shares in a maxi ISA.
Any UK residents over eighteen years old can open either one maxi ISA or two mini ISAs. 16 to 18 year old can also open ISAs, but can only invest in cash, and not I stocks and shares.
It was decided in the budget of March 2007, that as of the next financial year, the mini ISA and the maxi ISA would be abolished in favour of just one ISA in which £3,600 cash can be invested and £7,200 stocks and shares.
It is possible to transfer ISAs from one manager to another, but cash can not be transferred to stocks and shares and vice versa. It is also worth noting that if money is transferred manually, it will be treated as a withdrawal and this cannot be invested in another ISA if the saver’s subscription limit has already been reached.Next Article: Offshore Banking