Individual Savings Accounts

An Individual Savings Account (ISA) is a tax-efficient ‘wrapper’ designed to go around an investment. You’ve got until 5 April 2014 to use your current 2013/14 tax year annual ISA allowance before you lose it forever.

Splitting the investment
The crucial thing to remember is that in every tax year – which runs from 6 April one year to 5 April the next year – you’re only allowed to invest a certain amount in your ISA. In this 2013/14 tax year, which ends on 5 April 2014, you can invest a total of £11,520 – made up from just the money you pay in, not the interest or growth earned.

This amount can be split in a few different ways. For example, you could save up to a maximum of £5,760 in one Cash ISA. The other £5,760 could be invested into a Stocks & Shares ISA with the same provider, or a different one. Alternatively, you may wish to invest up to the full £11,520 in just a Stocks & Shares ISA.

Tax-efficient returns
Any ISA investment growth, no matter how much, is free from Income Tax and Capital Gains Tax (a 10 per cent tax credit is still payable on UK share dividends and cannot be reclaimed).

Make sure that you don’t miss out on tax-efficient returns and start reviewing your options now. Here are some examples showing how you could allocate your ISA money:

Transferring other ISAs
As well as currently being able to invest your full ISA allowance of £11,520 in a Stocks & Shares ISA, you can also transfer some or all of the money held in previous tax year Cash ISAs into a Stocks & Shares ISA. A Stocks & Shares investment is a medium- to long-term investment, but remember the value of your investment can go down as well as up and you may get back less than you originally invested.

Junior ISAs
A Junior ISA (JISA) is a long-term, tax-efficient savings account for children. Your child can have a JISA if they are under 18, live in the UK and weren’t entitled to a Child Trust Fund account.

There are two types of JISA: a Cash JISA, and a Stocks & Shares JISA. Your child can have one or both types of JISA. Children aged 16 and 17 can open their own JISA, or it can be opened by the person with parental responsibility for the child.

Anyone can pay money into a JISA, but the total amount can’t exceed £3,720 in the current tax year. For example, if your child has £1,000 paid into their Cash JISA from 6 April 2013 to 5 April 2014, only £2,720 could be paid into their Stocks & Shares JISA in the same tax year.

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