ISAs
What is an ISA?
Individual Savings Accounts, or ISAs, are a form of tax free savings. Unlike a standard savings account, the interest you receive on your ISA savings is paid to you entirely tax free. An individuals ISA allowance changes each year but if it is not used in one year the ISA allowance cannot be carried over to the following year.
Information about ISA savings accounts
If you would like to learn more about ISA savings accounts then look no further – TheRetirementCentre.com provides comprehensive information about the best performing ISAs and many other financial matters, to help you to make more of your retirement income.
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What are the different types of ISA?
There are two main different types of ISA, a Cash ISA and a Stocks and Shares ISA. The interest rates and performance of an ISA will depend on the provider, as there are many ISA providers in the market.
A Cash ISA operates in exactly the same way as a bank or building society savings account, the only difference being that with a cash ISA you don’t pay tax on the interest that you receive – whereas with other savings accounts, your interest is taxable. There are limitations on the amount of money you can save in your cash ISA each tax year – in 2012, the limit is £5,640.
Stocks and Shares ISA differ to a cash ISA in that stocks or shares are invested in either individually selected shares (Self Selected ISA) or in shares selected by a fund manager. Stocks and Shares ISA performance depend on the type of investment made, so you need to bear in mind that the value of the ISA may go up or down. The best stock and shares isa performance can depend on the fund and manager appointed to run the fund. Any gains you make from an increase in share price will be free from capital gains tax.
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What is the allowance in the ISA 2012 tax year?
The ISA limits are now increased each year in line with the increase in the Consumer Prices Index (CPI).
The current limit set for this tax year (2012) is £11,280 – up to £5,640 of which can be saved as a cash ISA, or if you prefer, you can use the whole amount for shares. There are three basic scenarios for using your ISA allowance.
• Using the maximum cash allowance – you can put £5,640 into a cash ISA, leaving £5,340 available to fill with shares if you wish, although there is no obligation to do so.
• Use it all for shares – if you wish, you can invest £11,280 worth of shares, but as this takes you to the allowance limit, you won’t be able to add any tax-free cash savings.
• Mix n’ Match. You can save any amount under the £5,640 limit in cash, then use the rest of your £11,280 allowance to put in a shares ISA. For example, if you were to save £2,000 in a cash ISA, that leaves you an allowance of £9,280 to invest in shares.
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When does the amount I can invest in an ISA apply to?
ISA allowances are dictated by the tax year, so any savings or investments using your annual tax free ISA allowance must be made in that tax year. The tax year runs between the 6th April and the 5th April the following year.
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Can I use my unused ISA levels from previous years this year?
Unfortunately not – you’re not allowed to rollover any unused allowance to the following year, whether in part or in entirety, so if you don’t use your year’s allowance, it’s lost for good.
This means that your ISA should always be your first choice for depositing savings, as after the tax year ends, any savings or investments stay within the tax-free ISA wrapper for the future, where they’ll continue to earn interest
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What was the allowance / stock and shares isa rules in the ISA 2011 tax year?
In the tax year 2011 which ran from 6th April 2011 to 5th April 2012, the maximum annual ISA investment was £10,860. Individuals were able to invest up to £10,860 into a stocks and share isa, or invest up to £5,340 into cash ISA, with the remainder available to invest in a stocks and shares isa.
Any un-used ISA allowance from the 2011 tax year unfortunately can not be carried over into the 2012 tax year.
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What will the ISA allowance be for the 2013 tax Year?
Future increases to ISA allowances will be linked to the Consumer Prices Index (CPI) The ISA allowance for 2013 hasn’t yet been announced – but in order to keep our visitors up to date, we’ll publish them here as soon as they’ve been released.
Please feel free to sign up to TheRetirementCentre.com Newsletter, so that you can be one of the first to hear what the new tax free savings levels are.
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What is the best ISA rate?
Finding the best ISA rates is a matter of comparing providers and the rates they are offering. There are a wide range of products available, all with different rates of interest (Cash ISAs) and different returns (Stock and Shares ISAs).
To help you identify the Best ISA for your needs whether that be the best share isa or Cash ISA, we’ve compiled a selected range of ISAs to choose from click the link above to find the Top ISA rate for your needs .
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What happens to my old PEPs & TESSAs?
Personal Equity Plans (PEPs) and Tax-Exempt Special Savings Accounts (TESSAs) were both types of tax free accounts that were sold in the 1980s and 90s, prior to the development of ISAs. Once ISAs were launched, these products began to be phased out – as of April 2008, any money left in PEPs or TESSAs were moved into the ISA regime.
TESSAs were basically cash-based accounts, and between 1999 and 2004, they were changed to become TESSA-Only ISAs (TOISAs). These have now all been changed to basic cash ISAs, but it’s likely that they only offer a very low rate of interest. However, all the normal ISA rules still apply, so you can transfer to a different ISA in order to maximize your rates if you wish.
Whereas TESSAs were converted to cash ISAs, any PEPs which still exist have automatically been transformed into Stocks and Shares ISAs. You can continue to invest in them inline with the
