ISA Investment Tips

February 23rd, 2015

With the rush season of utilizing your ISA allowance before the end of the tax year, the Telegraph have published a handy article with some good tips. The full article has a lot of detail, which you can see here.

Six common Isa questions answered

How much can I invest in an Isa?

You can save £15,000 for the 2014-15 tax year, which ends on April 5. The Isa allowance will then go up to £15,240.

What are the different types of Isa?

The most popular choice is the cash Isa – essentially a savings account where the interest is not taxed. The other option, the stocks and shares Isa, allows a variety of investments to be held, not just shares as the name suggests.

How can I split my Isa allowance? You can put the whole £15,000 in cash, or all of it in shares, or in any combination in between. But you can open only one stocks and shares Isa and one cash Isa in any tax year.

What are the tax breaks on a stocks and shares Isa?

Savers do not pay capital gains tax on profits, but there is a 10pc tax on dividends from UK shares. This is deducted at source, just as with non-Isa holdings. As a result, basic-rate taxpayers will pay the same inside or outside an Isa. Higher-rate taxpayers will, however, net significant tax savings because there is more tax to pay outside an Isa.

I have Isas with different providers. Will they lose the tax benefits if I consolidate all my Isas into one?

If you are unhappy with the rate being paid on a cash Isa or the fees levied on a stocks and shares Isa, you can switch and not lose the tax break. But be sure you contact the new provider to arrange a switch – don’t just withdraw the money and reinvest it.

If I don’t use the full allowance can it I roll it over?