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INDIVIDUAL SAVINGS ACCOUNTS (ISA)
If you are looking for the best Individual
Savings Account (or ISA for short) it is best o be aware of all the
facts. You can then shop around for the best ISA deal on the Internet in
the knowledge that the investment is right for you. Make sure you look
out for the best ISA deals before you lock your money in.
Individual Savings Accounts (ISAs) are tax-free savings and investment accounts. They were introduced in 1999 to replace PEPS and TESSAs. You can use an ISA to save cash or
to invest in stocks and shares.
There are two types of ISA:
the Maxi ISA that can contain cash, investment-based life insurance or stocks
& shares. All the investments in a Maxi ISA must be with the same company.
Alternatively,
Mini ISAs can contain either stocks and shares, cash, or a life insurance policy.
In each tax year starting on 6 April. you can put money into either one maxi ISA
or two mini ISAs (stocks and shares or cash). The most you can save or invest in a tax year is £7,000. The government has
legislated that the limit will stay at £7,000 until April 2010 With the Maxi ISA
you can save up to £7,000. It is best to shop around for the best ISA from the comfort of your home. How much tax can you save on your ISA investment? On the interest from savings, if you pay tax at the basic rate, you would normally pay 20 per cent tax (in the tax year 2006-2007) on your interest. If you pay tax at the higher rate, you would normally pay tax at 40 per cent, whereas if you pay the 'starting rate' of tax you would pay tax at 10 per cent.
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