A tax-efficient integral part of your investment strategy
It’s not going to be long before we see the arrival of the New Year, and with it the start of the ISA (Individual Savings Account) season. The 2015/16 deadline on 5 April 2016 is when you need to have taken full advantage of this year’s ISA allowance.
ISAs are not products in their own right but are ‘wrappers’, designed to protect your investment from Capital Gains Tax (CGT), and also provide the opportunity for tax advantages on the income generated.
How much can you invest in an ISA?
There are two different types of ISA: a Stocks & Shares ISA and a Cash ISA. You can put your £15,240 ISA allowance for 2015/16 in a Stocks & Shares ISA, a Cash ISA or a mixture of the two. You can also freely transfer any ISA savings you’ve built up previously between a Stocks & Shares ISA and a Cash ISA. Cash can be held in a Stocks & Shares ISA and does not need to be held solely for the purpose of investing in assets, and from 6 April 2015, the Additional Permitted ISA allowance has become available to the spouse or registered civil partner of a deceased ISA investor.
What’s a Cash ISA?
It’s basically a savings account where you don’t pay tax on any interest you earn. So if you have any savings, it can be good idea to start with a Cash ISA.
What’s a Stocks & Share?
It’s a tax-efficient investment account that lets you put your money into cash and/or different types of investments. With Stocks & Shares ISAs, any returns you make will be tax-efficient. Remember, as with any investment, the value of your fund can go up or down and may be worth less than you paid in.