ISAs

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1. What is an ISA?

Individual savings accounts (ISAs) were introduced in April 1999 and replaced personal equity plans (PEPs) and tax exempt special savings schemes (TESSAs).

An ISA is not an investment in its own right but is a tax-exempt wrapper in which you can hold your equities, bonds and funds to shelter them from income and capital gains tax.

Apart from your pension plan, ISAs are the most important and easily accessible annual tax break on savings for any UK resident who is over 18. 16 and 17-year-olds can deposit up to £3,600 per annum in a mini cash ISA (rising to £5,100 in April 2010).

• You can invest up to £7,200 a year (in 2009/10) in a tax-free environment (rising to £10,200 for over 50s in October 09, and everyone else in the next tax year), and you can keep doing this year after year for as long as ISAs remain available, i.e. there is no overall limit.
• You can put a broad range of equity and bond investments in ISAs, as well as units trusts, OEICs, investment trusts and exchange traded funds.
• You can also allocate some of your annual allowance to cash deposits.
• The fund builds up free of capital gains and income tax, and in most cases you can withdraw your money at any time tax free.

So in general, ISAs are very good news.

How long will ISAs be around? They made their debut on 6 April 1999, and the government in the past has guaranteed their availability till 2010. They were formally 'reviewed' in 2006 so as to give investors plenty of time to adapt to the changes. If they are abolished, or if the rules change, the tax validity of ISAs you have already taken out will not be affected.

1. What is an ISA? 2. Who can take out an ISA? 3. ISA investments: the 'Components' 4. The different kinds of ISA: Maxi, Mini and Tessa-only 5. How many ISAs can you have? 6. How much can you put in an ISA? 7. Maxi or Mini? 8. Tax rules on ISAs 9. Practical significance of ISA tax rules 10. Cash ISAs 11. Stocks & Shares ISAs 12. Choosing an ISA fund 13. Buying an ISA 14. Charges and CAT standards 15. Where to find an IFA 16. Switching ISA investments 17. Transferring shares into an ISA 18. Withdrawing funds from an ISA 19. Conclusion

• Fear and Loathing in My Bank Account