What’s a ISA?

Are you looking for advice about an ISA?

An ISA is basically an Individual Saving Account (ISA) with a bigger allowance. What’s good about them is that you can save up to £20,000 a year free of income and capital gains tax.

They’re also more flexible than the old-style ISA as you can move your investment between cash and stocks-and-shares and back again if you want . Previously, you could only move from cash to stocks-and shares but not back the other way. Once you’d made the switch, that was it.  The way to think of a NISA is as a series of smaller individual investments bundled together as one larger investment.

However, if you want to keep your cash and stocks-and-shares investments separate, you can take out different ISAs to do that. There’s no limit to the number of ISAs you can have, as long as you don’t go over the £20,000 allowance in a tax year.

The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.

For ISAs investors do not pay any personal tax on income or gains, but ISAs may pay unrecoverable tax on income from stocks and shares received by the ISA managers.

Tax treatment varies according to individual circumstances and is subject to change.

Stocks and Shares ISAs invest in Corporate bonds; stocks and shares and other assets that fluctuate in value.

Here’s an example

You’ve got £20,000 to save and want to split how you invest it. You could put £5,000 in cash and £10,000 in stocks and shares. You’ve now got £5,000 remaining you can divide between the pots or stick the whole lot in one or the other.

Things to think about

• If you invest in a fixed-rate NISA (New ISA), you’ll usually have a static level of interest for a certain period of time and penalties or restrictions on withdrawing funds.
• If you opt for a variable-rate NISA (New ISA), your interest rate will usually go up and down depending on the stock-market, but you’ll be able to withdraw funds without penalty.
• You don’t have to pay capital gains tax on the profits you make from share price increases.
• You should be able to transfer any existing ISAs into a new NISA (with a few rules).
• Don’t withdraw funds to transfer into a new NISA (New ISA) though, or you’ll lose the free of income and capital gains tax benefits. Ask your new provider to do it for you.

If you’d like any help or advice about investing in a NISA (New ISA), get in touch using the form on the right-hand side of this page. We’ll get back to you as soon as we can.

Alternatively, you can always call us on 01244 47010  or email: info@moneytreewm.co.uk .