Independent Financial Advisors - IFA Bolton, UK

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Individual Savings Account (ISA)

An ISA is a scheme that enables investment in shares, unit trusts, investment trusts, open-ended investment companies, cash or insurance policies to be made tax efficiently. By investing the monies within an ISA this allows all capital gains to be received free of capital gains tax, thus giving a tax efficient investment. ISA managers are no longer able to reclaim the 10% income tax credit on dividends; however it is still possible to reclaim the 20% tax payable on distributions relating to an interest distribution.

The investment limits on ISAs are reviewable each tax year by the Chancellor and as from 6th April 2008 the total ISA allowance is £7,200, increasing to £10,200 from 6th April 2010 (from 6th October 2009 for those aged 50 and over). Up to £3,600 (£5,100 from 6th April 2010) of the allowance can be invested in cash with one provider with the remainder being invested in stocks & shares with either the same provider or a different provider.

An investor is able to invest in two separate ISAs each tax year; a cash ISA and a stocks & shares ISA.

You are able to invest in Stakeholder standard ISAs, this means that the ISA must conform to regulations laid down by the Government in relation to Charges, Deposits and Terms.

As from 6th April 2008 there is no longer a distinction between ‘mini’ and ‘maxi’ ISAs. Mini cash ISAs, TESSA-only ISAs and the cash component of a maxi ISA automatically became cash ISAs.

Mini stocks & shares ISAs, the stocks & shares component of a maxi ISA and all Personal Equity Plans (PEPs) automatically became stocks & shares ISAs.

Previous and current tax year Cash ISAs can be transferred directly into a stocks and shares ISA, subject to the provider allowing this.

Money in an ISA can be withdrawn at any time, subject to the rules imposed on savers by different ISA providers.
 
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