While browsing the internet I came across this post which gives a general breakdown on what an Individual Savings Account (ISA) is all about. Some of it is general knowledge to most people who invest their money regularly or try and save on a monthly basis, other snippets were more interesting.
Did you know that an ISA is not limited to having stocks and shares? You can have a cash ISA, the cash ISA is the ‘safer’ option as your interest rate is based on the Bank of England’s base rate while the stocks and shares depend on the value of the assets. ISA has limits which have increased over time, but the limit or allowance is the total amount you are allowed to allocate towards your ISA, and if you have an ISA as cash AND as stocks and shares you can divide it between the two but are not allowed to have two with the full amount in, so for example the limit for this year is 11,280 pounds, you can have 5000 pounds in stocks and shares and 6280 in cash, but you cannot have both with 11,280 pounds in each.
ISAs have been around since 1999 and when they were first launched it was a very complicated process to obtain and maintain an ISA. Originally the total allowance for an ISA was 7,000 pounds, and in March 2011 the Chancellor announced that the allowance would increase yearly in accordance to the retail price index.
ISAs are a great investment, especially if you have a small capital amount and wish to receive dividends from it, the tax on an ISA is 10% and bonds which are put into stocks and shares ISA are completely tax free!
ISAs sound extremely complicated and could possibly be overlooked for the additional benefits they offer by the man on the street, but with the latest news from budget and the problems with interest rates, you do no harm in obtaining some professional financial advice for your own situation and how an ISA could be beneficial to you!
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