An ISA is a tax-efficient wrapper in which you can hold investments such as cash, shares and stock market funds.
ISAs can be used to save cash and the interest will be tax-free. If you invest in shares or funds, any capital growth will be tax-free and there is no further tax to pay on any dividends you receive.
Your ISA questions answered
Q: Since the ISA contribution limit changes, how much can I now invest?
A: If you were born on or before 5 April 1960 (that is, aged 50 or over during the current tax year) you can save up to £10,200. The full £10,200 can be invested in a stocks and shares ISA with one provider or up to £5,100 can be saved in a cash ISA with one provider, with the remainder being saved in a stocks and shares ISA with either the same provider or another. From 6 April this year, the under 50’s ISA limit will increase to £10,200, up to £5,100 of which can be saved in cash for all ISA investors.
Q: Can I invest the full £10,200 in a cash ISA?
A: No. Although ISA limits have been extended, there are still separate limits for cash ISAs and stocks and shares ISAs. The maximum amount you can save in a cash ISA if you are over 50 is £5,100. If you are under 50 the current limit remains at £3,600. However, from 6 April 2010 this will increase to £5,100 for everyone.
Q: Can I save in a cash ISA and also invest in a stocks and shares ISA at the same time?
A: The limits may have changed but the principle behind ISAs remains the same. From 5 October last year, if you were saving the maximum amount allowable in a cash ISA, at the same time you could also invest the rest of your allowance in a separate stocks and shares ISA – up to the permitted limits.
Q: I am over 50 and have already taken out an ISA this year. Will I be able to increase my ISA?
A: In the vast majority of cases you should be able to pay more into your ISA, up to the new limits. If you already have £3,600 saved in your cash ISA, you should be able to increase this by a further £1,500.
If you would like to discuss Isa Investments in more depth please feel free to contact us on 01454 321511.
