ISA's

What Are ISA's?

An ISA is and Individual Savings Account. ISA's are basically tax free savings accounts for individuals, meaning that the individual does not need to claim any income or capital gains to the Inland Revenue. The maximum amount that you can currently invest in an ISA each financial year (6th April to following 5th April) is £7000, however only £3000 of this can be cash, the rest is stocks and shares.

ISA's are Individual Savings Accounts therefore you cannot take out an ISA jointly with somebody else, or on behalf of somebody else. You must be over 18 to take out an ISA (16 for a mini cash ISA).

What Types Of ISA Are There?

Essentially there are two types of ISA, a Maxi ISA and a Mini ISA. You cannot take out both in one financial year. With a Maxi ISA you can have one Lisa that contains both cash and shares, this could be any amount of cash up to £3000 and the remainder of your £7000 allowance in shares.

Mini ISA's can be taken out from different providers, you could have a Mini Cash ISA from one provider, and a stocks and shares ISA from a different company. If you withdraw money from a Cash ISA, you can still only invest the remainder of the £3000, e.g. you invest £2500 then withdraw £2000 you can still only invest £500 more in that financial year.

As with all types of investment if you are in any doubt, consult an independent financial advisor.