ISAs

An Individual Savings Account, or ISA, should be a part of everyone's saving strategy. As long as you are aged 16 or above, an ISA enables you to save up to a certain amount each year completely tax-free. This means that it will usually come out on top of other savings accounts, which may offer better initial interest rates but tax you on your returns. The current allowance is £7,200 per year for everyone under the age of 50, and £10,200 for everyone aged 50 or over. From April 6th 2010, the higher allowance will be applicable to everyone.

There are two different types of ISA; a Cash ISA and a Stocks and Shares ISA. Only half of your total allowance can be used for each type, and you can only use one provider per year for each type. You can however hold a Stocks and Shares ISA with one provider, and a Cash ISA with another, meaning that you can shop around for the best deals. You are also allowed to change your provider year on year. If you do not use your ISA allowance before the end of the financial year (5th April), you will lose the tax-free benefit for that year. Therefore, if you have savings, you should consider making use of your ISA allowance in conjunction with other savings and investment plans that you may have.

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A Few ISA Basics

• ISAs (Individual Savings Accounts) are investments on which you do not have to pay taxes or capital gains taxes.
• ISAs tend to have very good interest rates, so people usually see a good return from investing in an ISA.
• There are stocks and shares ISAs and cash ISAs.