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louise
Beginning Saver
Joined: 17 Oct 2004
Posts: 38
Cash Points ££ 110.00
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 Posted: Mon Oct 18, 2004 12:15 pm Post subject: ISA Newbie |
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| I'm new to Isa's I knwo they are tax free but how much can I invest them ? |
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Sarah
Money Manager
Joined: 16 Jul 2004
Posts: 831
Cash Points ££ 12024.38
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| Posted: Thu Oct 21, 2004 12:33 pm Post subject: |
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Cash ISA's are Individual Savings Account
Types of ISA
There are three types of ISA: 'mini' ISAs and 'maxi' ISAs for new investments, and 'TOISAs' (TESSA only ISAs).
Components
An ISA can contain up to three components:
a cash component: a cash deposit that is similar to any other ordinary savings account, apart from the tax-free status. A TOISA must consist solely of a cash deposit.
a stocks and shares component: the money is invested in qualifying investments consisting of any combination of stock market equity investments (with no geographic restriction) or public debt securities such as government or corporate bonds. As a consequence, the risk profile of the ISA may be anything from low to high.
an insurance component: a qualifying life insurance policy, such as an insurance bond.
Subscription limits
There are restrictions on investing in ISAs in each tax year (6 April to the following 5 April) which affect the type of ISA that may be opened and the amount of the investment.
Any UK resident individual of at least eighteen years of age can invest in one 'maxi' ISA, with all three components provided by a single financial institution. Alternatively, a person can invest in up to three 'mini' ISAs, one for each component (see above). The three mini ISAs may be with three different providers, or two or three components may be with the same provider. TOISAs and the full transfer of ISAs created in previous years to another provider have no bearing on these restrictions.
UK resident individuals aged between 16 and 18 can also open a cash mini ISA or a maxi ISA, but can only allocate their investment to the cash component.
The amounts which may be deposited in an ISA in a tax year are fixed by law, which makes provision for the limits to decrease with effect from 6 April 2006:
For a mini-ISA:
Cash: £3,000 (reducing to £1,000 from 6 April 2006)
Stocks and shares: £3,000
Insurance: £1,000
For a maxi-ISA: a total subscription limit of £7,000 (reducing to £5,000 from 6 April 2006) which may be invested:
Cash: £3,000 (reducing to £1,000 from 6 April 2006)
Stocks and shares: £7,000 (reducing to £5,000 from 6 April 2006)
Insurance: £1,000
Tax treatment
All income (dividends and interest) and all capital gains are tax-free.
The government has guaranteed that ISAs will continue to have tax-free status in all other respects until 5 April 2010, although they may be continued beyond that date. |
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