ISA Ideas

• ISA Limits 2013
• Cash ISAs
• Stocks & Shares ISAs
• ISA Transfers
• Fund Supermarket ISAs
• Junior ISAs
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• Income ISAs
• Growth ISAs
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• ISAs Explained

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Tax-Efficient Saving

Welcome to ISA.co.uk, your online destination for ISA information. 

Remember - you only have until 5th April 2014 to make use of your 2013/14 ISA allowance. You can invest up to £11,520 per person and shelter your savings from the taxman today!

 

James Caldwell, Director

Cash ISA Selection

Provider	Plan Name	Deposit Taker	ISA Option	Term	Maximum Potential Return	More Info
	Deposit Growth Plan	Investec Bank plc		5 years	130% x any FTSE 100 growth (no limit)	More Info >
Return of 130% x any FTSE 100 growth, no upper limit Capital protected Low minimum - £3,000  Short/medium term alternative to fixed rates  Also available for Cash ISA & Cash ISA transfers Limited offer - deadlines apply. May close early if oversubscribed Plan designed to be held for full term Arrangement fee applies Returns not guaranteed. You may only receive a return of your original capital

Important Information: Structured deposits offer you the potential to earn higher returns than you would with a regular savings account. Your returns are based on the performance of an index or commodity. If the investment does not perform well you may receive no income or capital growth, but you can be confident that your capital will be repaid. You have no access to your deposit during the term of the account, typically 3 to 6 years but your original capital will be repaid in full at the end of the term. In the event that the deposit taker is unable to repay your initial investment and any returns stated you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS) depending on your individual circumstances.

Instant Access Cash ISA Selection

Fund Manager	Account	Rate	Term	More Info
	E-Cash ISA	1.30%	Instant Access	More Info >
No bonus included in the rate No notice period or loss of interest for withdrawals Transfers accepted Minimum balance £10 Access – online, telephone and post Annual interest Variable interest rate

Fixed Rate Cash ISA Selection

Fund Manager	Account	Rate	Term	More Info
	2 Year Fixed Rate Cash ISA	1.85%	2 Years	More Info >
Earn 1.85% AER tax free. Minimum deposit £1,000 Interest will be paid at the rate of 1.50% AER/Gross (fixed) p.a. until the Fixed Rate ISA start date - 29th July 2013 Partial withdrawals are not permitted during the fixed term Early closure will result in an interest charge
	1 Year Fixed Rate Cash ISA	1.85%	1 Year	More Info >
Minimum opening balance of £1,000 Manage your account online Withdraw cash early if you need to (subject to loss of interest) Transfer from other cash ISA providers

Income Investment ISA Selection

Provider	Plan Name	Counterparty	ISA Option	Term	Maximum Potential Return	More Info
	FTSE 100 Enhanced Income Plan	Investec Bank plc		6 years	5.76% fixed income per annum	More Info >
5.76% income paid regardless of the performance of the FTSE 100 Monthly income Available for ISA, ISA transfer and direct investment  Investment deadline for ISA transfers - 10 May 2013 Investment deadline for direct and ISA - 4 June 2013 Capital is at risk if the FTSE 100 Index falls by more than 50% during the term and finishes lower than its starting value, in which case your initial investment will reduce by 1% for each 1% fall Minimum investment £3,000 Product designed to be held for the full term

Important Information: Structured investment plans are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. Income and growth returns are not guaranteed. There is a risk of losing some or all of your initial investment due to the performance of the underlying Index or commodity. There is also a risk that the company backing the plan known as the Counterparty may be unable to repay your initial investment and any returns stated.

Growth Investment ISA Selection

Provider	Plan Name	Counterparty	ISA Option	Term	Maximum Potential Return	More Info
	FTSE 100 Enhanced Kick Out Plan	Investec Bank plc		Up to 5 years	8.5% per annum	More Info >
8.5% for each year (not compounded) provided the FTSE 100 finishes higher than its starting value (subject to averaging) Potential to mature early, from year 1 onwards Available for ISA, ISA transfer and direct investment Investment deadline ISA transfers - 10 May 2013 Investment deadline for direct and ISA - 4 June 2013 Capital is at risk if the FTSE 100 Index falls by more than 50% during the term and finishes lower than its starting value, in which case your initial investment will reduce by 1% for each 1% fall Minimum investment £3,000 Product designed to be held for the full term
	FTSE 100 Defined Returns Plan Investec Version	Investec Bank plc		Up to 5 years	67.5%	More Info >
Fixed return of either 40.5% at the end of year 3 or 67.5% at the end of year 5 provided the FTSE 100 finishes higher than its starting value (subject to averaging) Potential to mature early at the end of year 3 Available for ISA, ISA Transfer and Direct Investment Investment deadline ISA transfers - 10 May 2013 Investment deadline for direct and ISA - 4 June 2013 Capital is at risk if the FTSE 100 Index falls by more than 50% during the term and finishes lower than its starting value, in which case your initial investment will reduce by 1% for each 1% fall Minimum investment £3,000 An arrangement fee applies to this plan Product designed to be held for the full term

Important Information: Structured investment plans are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. Income and growth returns are not guaranteed. There is a risk of losing some or all of your initial investment due to the performance of the underlying Index or commodity. There is also a risk that the company backing the plan known as the Counterparty may be unable to repay your initial investment and any returns stated.

Why should you use your ISA Allowance in 2013?

An individual savings account, or ISA for short, is a way of saving money in a tax-efficient way.

It's a fact that most of us in the UK, and particularly the younger generation, are not saving enough. Recent economic pressures have led many people to see saving as a luxury, but whatever our circumstances we should all get into the habit of saving some of our income, and an ISA is one way to do this.  

How do ISAs work?

ISAs are not investments in themselves - instead, they act as tax 'shelters', protecting your cash or investments from tax. There are two basic types of ISA:

• Cash ISA - Under the 2013/14 ISA Allowance of £11,520, individuals are permitted to save up to £5,760 in a cash ISA. With a cash ISA, money is placed on deposit and all interest is paid gross without any tax having been deducted. Money can be paid into a cash ISA as a lump sum or in regular amounts.

• Stocks and shares ISA - Under the 2013/14 ISA allowance, up to £11,520 can be invested. This covers investments in shares, unit trusts, investment trusts, open-ended investment companies, life insurance policies, corporate bonds and gilts. Money can be paid into a stocks and shares ISA as a lump sum or in regular amounts.

Within the terms of the current ISA allowance, you can put £5,760 into a cash ISA and the remaining balance into a stocks and shares ISA. If, at a later date, you decide that you want to transfer your cash ISA into a stocks and shares ISA, this is permitted. However, it's important to be aware that this only works one way - you can't transfer your stocks and shares ISA balance into a cash ISA.

Frequently asked questions about ISAs

Which type of ISA is right for me?

This will depend on your saving objectives and your attitude to risk. With cash ISAs, you have the security of knowing that your deposited capital is protected, but the caveat is that you may find your potential for earning interest is limited - particularly if you need instant access to your money. If you're prepared to tie up some money in a cash ISA for a fixed period of time, you may be able to glean slightly more interest. With stocks and shares ISAs you need to be comfortable with investment risk, as your underlying capital is not guaranteed and there's always the chance that it may go down in value. This risk may be balanced out if you are investing for the long term, as stocks and shares ISAs will generally outperform their cash counterparts.

How many ISAs can I have?

There are limits on the number of ISAs you can subscribe to each tax year. Current ISA rules allow each individual to have one cash ISA and one stocks and shares ISA per tax year.

How much can I save in an ISA?

With an ISA you have the option to either save on a regular basis or invest an initial lump sum up to the maximum ISA allowance, which is set every year by HMRC. The allowance for 2013/14 is £11,520. Of this allowance, up to £5,760 can be placed in a cash ISA, while the remainder can be placed in a stocks and shares ISA. Savers also have the option to place their entire £11,520 allowance in a stocks and shares ISA.

Saving is a habit, so commit to saving a minimum amount that you can afford every month. With a cash ISA you can save up to £5,760 per year and most providers will allow you to start saving from as little as £1 (although some will pay better rates of interest for higher contributions). For stocks and shares ISAs you can invest up to £11,520 per year, and many providers allow you to invest from £25 per month minimum.

How can inflation affect ISAs?

It's important to bear in mind that if the rate of inflation is running higher than the interest you are receiving within your cash ISA then your money will depreciate in real terms.

What are the tax benefits of an ISA?

With a cash ISA it's simple - no tax will be deducted from your allowance. With a stocks and shares ISA, you still pay some tax, but you pay substantially less that you would otherwise. If you are a basic rate taxpayer, you pay tax at 10% on dividend income. This is taken as a 'tax credit' before your receive the dividend and is not refunded for ISA investments. For higher rate taxpayers dividend income is normally subject to tax at 32.5%, but within an ISA, apart from the 10% 'tax credit', there's no further tax to pay. As an additional benefit, all capital gains within an ISA are free from capital gains taxation.

What if I need to get my money out of an ISA quickly?

It depends on the terms and conditions of the ISA you have taken out. With most cash ISAs you can withdraw money without losing any tax benefits already built up. However, with some accounts, you may lose interest if you withdraw money early. Some cash ISA plans are designed for the money to be held for a set period. With investment ISAs there may be withdrawal charges, so always check the terms and conditions before committing to anything.

Can I transfer an ISA?

Many ISA providers will accept ISA transfers from other providers, although you should check to make sure that you understand the timescales involved for transfer. Some providers can be a bit slow in instigating the transfers. This means that if you're not happy with how your ISA is performing you have the option of voting with your feet. You can move your money if your existing ISA provider becomes uncompetitive and you find that you can get a better rate of interest elsewhere. This is especially true for cash ISAs. For stocks and shares ISAs the same principle applies, although with these types of investments you should take the long view on performance and not necessarily move your ISA on the basis of a less-than-stellar short-term investment performance. For more information, see ISA transfers.

What charges might I be expected to pay on an ISA?

This will depend on the individual ISA provider, so check with them for any charges applied for withdrawals or transfers, or if you need to access your money early.

Can I take out an ISA for my child?

In November 2011 the UK government launched Junior ISAs for children born after 2^nd Jan 2011 or before 1^st September 2002. For children born between these dates, junior ISAS are not available, as they will have received between £50 and £500 from the government to be invested into Child Trust Funds. With a junior ISA, a parent can invest up to £3,720 per tax year on behalf of each child. The money can only be accessed once the beneficiary turns 18, so it's a practical way to save for your child's future.

When were ISAs introduced and how have they been received? 

Individual Savings Accounts (ISAs) were introduced in the UK in 1999, replacing Personal Equity Plans (PEPs) and Tax-Exempt Special Savings Schemes (TESSAs) as a simplified savings model for people aged 16 and over. The current ISA market is estimated to be worth over £400 billion. According to TISA (the Tax Incentivised Savings Association), ISAs are now established as a core savings product for 42% of UK households.

In the tax year 2010/11, figures from the Office of National Statistics showed that people in the UK put more money into ISAs than they put into pensions. Approximately £15.8 billion was placed in stocks and shares ISAs and around £38 billion went into cash ISAs. Meanwhile, pension contributions in the same tax year amounted to approximately £14.2 billion.