Beginners' guide to Investments

Potentially Tax Efficient Options

Beginners’ Guide to Investments

Potentially Tax Efficient Options

Individual Savings Accounts (ISA)
There is no point in paying more tax than you have to so for most of us an ISA is worth considering as these are potentially tax efficient as there’s no personal liability to tax.

ISAs were launched by the Government in 1999 with the aim of encouraging us to save for the future.  An ISA is simply a wrapper for cash or stocks and shares investments. 

 

How much can you invest in an ISA?
In this tax year, which runs from 6 April 2008 to 5 April 2009, you can invest a total of £7,200 in an ISA.  This is known as your ISA allowance. 

What are your investment options?
You can invest all of your £7,200 ISA allowance in a stocks and shares ISA.  In a stocks and shares ISA you are invested directly in stocks and shares, or through a fund that is.

Or you could decide to invest up to £3,600 of your ISA allowance in a cash ISA.  You could then invest the rest of your allowance in a stocks and shares ISA.  You don’t have to use the same provider for both ISAs.  Cash ISAs are mainly offered through Banks and Building Societies