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The Tax Benefits of an ISA

The Tax Benefits of an ISA

One of the biggest reasons to invest in an ISA is to receive the many tax benefits these savings accounts offer. In fact, these investments are often referred to as a "tax free wrapper," where you can place money to earn interest or returns without having to pay the tax man for any of your earnings. The benefits can be used on either cash or shares, which means you get to control the amount of money you can make tax-free. Tax advantages fall into two categories: capital gains tax and income tax benefits.

ISA Income Tax Benefits

In most situations, any income you earn, through wages, interest or dividends, is subject to income tax. However, that is not the case with ISAs. All of the money you earn on these savings vehicles is completely tax free.

Income tax benefits are just part of the equation when you are considering an ISA, however. The other advantage to these accounts is the capital gains tax benefits you can enjoy.

ISA Capital Gains Tax Benefits

Capital gains tax benefits specifically apply to stocks and shares ISAs. Most investment products are subject to a capital gains tax if the amount of earnings from your shares in a single year exceeds the set limit. This tax requirement is waived for investments in ISAs, making them definitely worthwhile for those who plan to sell or make a great deal from their investment vehicles in a given year.

NEW PLAN: Up To 8% pa Potential Income

Or 3x any rise in the FTSE 100 Index, with no upper limit...

“With the best traditional savings rates offering around 2.7% per year, and significantly lower for Cash ISAs, the 

potential for 8% from a plan with full capital protection makes for a compelling headline. The Callable Deposit Plan has only just launched, and offers two potential returns. The first is if the deposit taker decides to 'call' (end early) the plan, which it can do at the end of each quarter after the first year. If it does, you will receive 2% for each quarter since the start of the plan, equivalent to 8% interest per year (not compounded).

However, If the deposit taker does not end the plan early and it runs the full six years, you will receive three times any rise in the FTSE 100 Index over the term of the plan, with no upper limit. For example, if the FTSE rises 10%, you will receive 30%, along with a full return of your initial capital. If the FTSE is lower at the end of the term, you will not receive any interest and only a return of your original capital.

With traditional savings rates failing to inspire, this plan offers the potential for significantly higher returns but without risking your capital.”

Oliver Roylance-Smith, head of savings and investment

This plan is also available as a Cash ISA and accepts ISA transfers. Application deadlines apply.

More Information »

High Income ISAs

High income ISA ideas:

ISAs Products

Cash ISAs

Fixed Rate & Instant Access ISAs:

Cash ISAs: 

Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

Latest News

How much can I pay into an ISA?

21st March 2019

Each tax year, there's a limit set by the government to the amount you can save and invest in ISAs: your “annual ISA allowance”. The allowances are intended to reward savers and encourage us to invest more to support our future retirements, without creating a tax haven that can be taken advantage of by very wealthy individuals who just want to avoid paying tax.

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