ISAs
How much can I invest?
The ISA allowance for everyone over the age of 18 is £10,680.
ISAs were introduced in April 1999, so an individual who has made full use of their annual allowances every year since then, will have sheltered £100,280 from the taxman - including the 2011-2012 allowance.
What else is changing?
Maxi and mini ISAs have been abolished. Existing mini cash, Tessa-only ISAs and the cash component of maxi ISAs are now re-classified as cash ISAs. In the same way, mini stocks and shares ISAs and the stocks and shares component of Maxi ISA are now re-classified as stocks and shares ISAs. Personal equity plans (PEP's) have become stocks and shares ISAs.
How many ISAs can I have?
You can open one cash ISA and one stocks and shares ISA each tax year. Up to £5,340 can be invested in a cash ISA. The remainder of your £10,680 allowance can be invested in a stocks and shares ISA. You do not have to put any money in a cash ISA: instead the full £10,680 can be invested in a stocks and shares account. Various non-cash assets can be held within a stocks and shares ISA. These include unit trusts, open-ended investment companies, investment trusts, exchange traded funds, shares or bonds.
Can I switch between cash and equities?
As a result of the rule changes, savers who initially invested in a cash ISA can transfer that money into a stocks and shares account. However, you cannot move from equities into cash.
Are all cash ISAs the same?
No. Cash ISAs are like any other savings account and there are a number of different types - easy access, fixed rate and notice accounts.
Can I transfer money I have invested in previous tax years?
Yes, you can transfer money without losing the tax-free status. However, you do need to be careful - if you close your existing ISA down and then look to move the money into another one you will lose the tax-break. You therefore need to make sure that your current provider treats it as a transfer and not an account closure.
Not all cash accounts accept transfers however, so this is something worth bearing in mind when comparing deals.
If you have money in a stocks and shares ISA, you can also change your underlying investments without losing the tax-break.
