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If you don't know much about ISAs (Individual Savings Accounts), then here's your chance to find out what they're all about and discover which one may be right for you.
ISAs were brought in by the Government in April 1999 as a tax efficient way of saving - you don't have to declare any income or capital gains made on your savings to the taxman. You can now save up to £7,200 each financial year (which runs from 6 April until the 5 April the following year).
There are two different types of ISAs – cash ISAs and stocks and shares ISAs. The Egg Cash ISA is a cash ISA.
You can have one cash ISA and one stock and shares ISA in each tax year.
A cash ISA can be made up of up to £3,600 in cash only.
A stocks and shares ISA is where your money is invested in stocks and shares, either directly or through things such as unit trusts, OEICs or investment trusts. You can invest up to £7,200 per tax year into a stocks and shares ISA.
You can have a combination of both a cash and a stocks and shares ISA, as long as you remain within your overall total allowance of £7,200 and your maximum subscription to a cash ISA of £3,600. You can also transfer the cash part of your ISA to a stocks and shares ISA at any point in the tax year, up to the overall ISA limit of £7,200.
Once you’ve subscribed your maximum allowance in an ISA you cant subscribe any more, even if you take some out.
So if you open a cash ISA and put £2,000 into it, the amount you can deposit for the rest of that tax year is £1,600. Even if you withdraw £500 from the ISA halfway through the year, the maximum amount remaining for you to deposit is still £1,600, not £2,100.
- If you are aged 16 or over, you can open a cash ISA. To open a stocks and shares ISA you must be aged 18 or over.
- You need to be a UK resident for tax purposes.
- You can't open an ISA on behalf of someone else - it has be in your name.
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