ISAs explained

‘ISA’ stands for Individual Savings Account, a tax-efficient wrapper offered under Government legislation as a way of encouraging you to save.Piggy Bank

An ISA sits over your choice of a number of different investments to shelter them from further tax on any income or gains earned. There are now just two types of ISA – the Cash ISA and the Stocks and Shares ISA – and the combined allowance for both in 2013/14 is £11,520.

Within this, the limit for Cash ISAs – or for the cash element within a Stocks and Shares ISA – is £5,760.

However, there is flexibility over how these limits can be used – you can, for example, put the maximum £5,760 in a cash account and £5,760 in a stocks and shares account. Alternatively, though, if you place just £2,000 in cash, you can use the entire remaining balance – £9,520 in this case – to invest in stocks and shares. If you wish, you may put the full £11,520 into a Stocks and Shares ISA.

In addition, you can transfer existing Cash ISA holdings to a Stocks and Shares ISA without impacting on your current tax year allowance. So, if you have £10,000 already sitting in existing cash ISA plans then this amount can be moved to a Stocks and Shares ISA, yet leave your entire current tax year allowance.

Finally, if you already have an ISA, you are permitted to transfer it to a new plan manager, without using any of your annual allowance.

Please feel free to download the ‘ISA Guide 2013-14‘ brochure*. It contains plenty of information on what you should consider when considering investing in an ISA.

Alternatively, if you require independent financial advice on ISAs, feel free to call on01554 770022 and we can arrange a no obligation appointment.

*Brochure provided courtesy of http://www.adviser-hub.co.uk