Seven useful things to know about ISAs
Article | 06 April 2016
With ISAs seemingly never out of the news, here’s just a quick reminder of some ISA key facts.
- The New ISA (NISA)
On 1 July 2014 ISAs were reformed into a much simpler product, the New ISA (or NISA). All existing ISAs automatically converted to a New ISA on this date. And all new accounts opened, on or after this date, are NISAs. You may find some providers referring to 'NISAs', for example, a stocks and shares NISA; at Invesco Perpetual we continue to refer to a stocks and shares ISA.
- To open an ISA you must be
- Aged 16 (or over) for a cash ISA. To open a cash ISA with us you need to be 18 or over
- Aged 18 (or over) for a stocks and shares ISA
- Resident in the UK for tax purposes, or a Crown employee (or their spouse/civil partner)
- The tax benefits of an ISA
- No capital gains tax on any capital returns
- No further tax to pay on any income received
- No requirement to include ISAs on your tax return
- Subscription limits
For the 2016/17 tax year you can invest up to £15,240 in an ISA. A tax year runs from 6 April to 5 April the following year. You have the choice of investing in a cash ISA, a stocks and shares ISA or both. If you choose to invest in both, there is no restriction on how you split the ISA allowance between the two, provided you don't exceed the annual subscription limit. Unused ISA subscriptions cannot be carried forward into the next tax year. This really is a 'use it or lose it' scenario.
- ISA transfer
Since 1 July 2014 it has been possible to transfer your stocks and shares ISA to a cash ISA and vice versa. Previously it had only been possible to transfer a cash ISA to a stocks and shares ISA.
- What about Junior ISAs?
Invesco Perpetual does not currently offer Junior ISAs. For more information on Junior ISAs, please visit https://www.gov.uk/junior-individual-savings-accounts
- Interesting ISA facts
- ISAs first made their appearance in 1999, following on from PEPs and TESSAs (Personal Equity Plans and Tax-Exempt Special Savings Accounts)
- There are over 22 million ISA holders*
- The market value of ISAs stood at £483bn at the end of tax year 2014/15*
*Source: HM Revenue and Customs
The value of investments and any income from them can go up and down (this may partly be the result of exchange rate fluctuations) and you may not get back the full amount invested.
Current tax levels and reliefs may change. Depending on individual circumstances, this may affect investment returns.
No advice has been provided by Invesco Perpetual. If you are in any doubt as to whether an ISA is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.