Investment

ISA

An ISA is an Individual Savings Account introduced by the government in 1999. ISAs are essentially a wrapper in which you can place your savings and investments to protect them from capital gains tax and, if they are a higher rate tax-payer, they will also enjoy a tax benefit of 22.5% on dividend income. ISAs do not have to be declared on tax returns.

ISA rules are changing from 6 April 2008

From that date:

• The annual ISA investment allowance will be raised to £7,200. Up to £3,600 of that allowance can be saved in cash with one provider. The remainder of the £7,200 can be invested in stocks and shares with either the same or a different provider.
• ISA savers will be able to invest in two separate ISAs each tax year; a cash ISA and a stocks and shares ISA. Mini and maxi ISAs will no longer exist.
• Mini cash ISAs, TESSA-only ISAs (TOISAs) and the cash component of a maxi ISA will automatically become cash ISAs.
• Mini stocks and shares ISAs and the stocks and shares component of a maxi ISA will automatically become stocks and shares ISAs.
• All Personal Equity Plans (PEPs) will automatically become stocks and shares ISAs
• ISA savers will be able to transfer money saved in their cash ISA to their stocks and shares ISA