Investments and Savings Introduction

Squirrel Wealth Management Ltd are on hand to help and advise you.

What is an ISA?

ISA stands for Individual Savings Account. An ISA is simply a tax wrapper around a product, for example a unit trust, that makes it more tax-efficient. For more information about unit trusts, see Unit Trusts.

ISAs were introduced by the Government to encourage more people to save. Investing in an ISA allows you to shelter your money from the taxman, as you can keep all the proceeds that you receive from that investment without paying income or capital gains tax.

You don't even have to declare your ISA on your tax return. There are now only one type of ISA. Tax assumptions are those currently applicable and are subject to statutory change. The value of the tax advantages will depend on your individual financial circumstances.

You can invest up to £10,200 each tax year with one company after April 2010. The full £10,200 can be invested in stocks and shares, or you can choose to split your money, with up to £5,100 in a cash component and the remainder in stocks and shares.

Who is allowed to invest in an ISA?

To invest in an ISA you have to be aged 18 or over (16 for certain mini cash ISAs) and ordinarily resident in the UK for tax purposes. You cannot hold an ISA jointly.

What are the tax benefits of an ISA?

Under current UK tax rules, all ISA investments are free of personal income and capital gains taxes. The value of the tax advantages will depend on your individual financial circumstances and the type of fund chosen.

How much can I invest in an ISA?

ISAs offer you the flexibility to invest from as little as £50 a month, up to the current annual limit of £10,200, all of which can be invested in stocks and shares. Remember that once you have invested the maximum amount allowed in any tax year, you cannot invest any more, even if you have withdrawn some money from your ISA during that tax year.

How many ISAs can I have?

You can take out one ISA each tax year, However, you can still hold onto ISAs from previous tax years. So you may end up with several ISAs.

The insurance component ceased to exist from 6 April 2005. It now forms part of either the cash or stocks and shares component of an ISA.

Is there a minimum time I have to hold my ISA?

There is no time limit as you qualify for the tax advantages immediately. However, if you are investing in a Unit Trust, you should bear in mind that this is a medium to long term investment (at least five years).

What happens if I need to get my money out?

You may withdraw money from your investment at any time, or alternatively, you can sell all your units and cash in the plan in full