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about UK isa's, how do UK isa's work, - Money Minder Financial Services....
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What Would You like to Know?
What is an ISA and how much can I invest?
An ISA is basically a form of tax efficient wrapper in which you
can place investments to give them tax efficient status. Your total
annual subscription limit to an ISA is £7,000 each tax year.
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What investments can I hold inside an ISA?
Subject to the overall limits, you can split your ISA between the
following components:
A. STOCKS AND SHARES
As with PEPs, you are able to hold stocks and shares within an ISA.
It is possible to invest up to £7000 into stocks and shares
in the tax year 06/07.
B. CASH
You have the option of holding a proportion of your ISA allowance
in cash, which will earn tax-free interest. You are able to deposit
£3000 in cash in the tax year 06/07.
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What is the difference between a Mini and a
Maxi ISA?
In addition to the different types of investments that can be held
within an ISA, there are also two types of ISA to invest in:
One ISA provider manages the Maxi ISA. It must offer the stocks
and shares component and may also offer cash.
If you wish to invest your full ISA allowance in stocks and shares,
you can only do so through a Maxi ISA as the maximum that you can
invest in a Mini ISA stocks and shares component is £4000
per year.
The Mini ISA can be used to hold only one of the two components
(shares or cash). You can hold each of the two components separately
with different providers, so you could have two Mini ISAs in any
one tax year.
IT IS IMPORTANT TO REMEMBER THAT YOU CANNOT INVEST IN BOTH A
MAXI AND A MINI ISA IN THE SAME TAX YEAR AND THAT YOU CAN ONLY HAVE
ONE MAXI ISA IN EACH TAX YEAR, PROVIDING THAT YOU DON’T ALSO
HAVE A MINI ISA IN THAT TAX YEAR.
The maximum contribution limits for each component are shown in
the following table:
|
ISA COMPONENT |
MAXI ISA |
MINI ISA |
| Investment
(Stocks & Shares) |
£7,000
(less any amount invested
into cash with the same provider as detailed below) |
£4,000
max |
| Cash |
£3,000 max |
£3,000 max |
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What is the Tax position of ISA’s?
Investments are free from capital gains tax, however, investors
will no longer receive a 10% tax credit on dividends from UK equities
as this has been totally removed from April 2004, meaning that such
dividends will be fully taxable from this date, although there will
be no further tax liabilities, even for higher rate taxpayers. However,
investments in corporate bonds and gilts are free from tax and are
able to reclaim the full 20% tax credit.
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What are the advantages of investing in the
Stocks and Shares part of an ISA?
The stocks and shares element of the ISA will allow you to take
advantage of the pooled resources and broad spread of risk offered
by a collective investment that brings together the shares of many
companies. The stocks and shares element can be invested in most
unit trusts, investment trusts and OEICS. These will usually be
actively managed by a professional fund manger who will buy and
sell shares on your behalf, with the aim of achieving the maximum
possible return on your investment. In the past, over the medium
to long term, this type of investment has produced an excellent
level of growth, although it is important to remember that past
performance is no guarantee for the future, and the value of such
investments can fall as well as rise.
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What is the minimum investment period of an
ISA?
Many ISA’s do not have a minimum investment period, however,
it is important to remember that any investment in stocks and shares
or life assurance should be considered as a medium to long term
investment. It is also important to consider any costs or penalties
that may be imposed by different providers should you wish to surrender
or cash in your ISA.
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What should I do now if I want to Invest in
an ISA?
If you would like to look further into investing into an ISA, you
can e-mail us at info@money-minder.com
or click on the "Online ISA
Centre" button below.
Alternatively you can call us FREE on 0800 197 88 88
between 9am and 5pm Monday to Friday when we will be happy to discuss
your requirements. We are able to offer a full advice service and
recommend the most suitable ISA for your circumstances.
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