Isa’s: what they are and how to get one?
Isa stands for Individual savings account, this is a tax-efficient way to save or invest. If you are looking to invest in an Isa this year you need to do so before the 6 April 2013.
The big ISA benefits are:
- No personal tax (income or capital gains) on any investments in an ISA.
- Income and gains from ISAs do not need to be included in tax returns.
- Money can be withdrawn from an ISA at any time without losing the tax breaks.
There are two different types of Isa’s – Cash Isa and stock and Shares Isa’s. A cash Isa could be in the form of a bank and building society deposits and a shares Isa can include most authorised unit or investment trusts, however there are some tax liabilities on the later in terms of paying 10% on dividends from any profit. Anyone over the age of 16 for a Cash Isa or over 18 for a shares Isa.
For the 2012-13 tax year you can make a miximum of £5,640 into a cash Isa or £11,280 into a stocks and shares Isa, or you can mix and match, investing a bit in both types of Isas. This amount is for each person, so if you are a couple you can invest as much as £22,560 in Isas in each tax year.
From the 6th of April this year, the Isa limit will be incrased to £5,760 and £11,520 respectively.
This is a tax-efficient way to save or invest, with no tax liability when the proceeds are withdrawn. Plus the government have stated that they have no plans to withdraw Isa’s in the future.
If you need some help investing in an Isa, then why not give Enable a call on 01279 755950