ISAs have gone through a few changes over the last few years; these have mainly centred on structure and annual contribution levels. They have however continued to offer tax free growth.
A Cash ISA is like any other savings account offered by a bank or building society, with one important difference; any interest that is paid is not taxed.
As with all savings contracts the Cash ISA market is very broad and competitive. Providers may offer introductory rates or fixed rates of return depending on how long a customer remains invested. It is possible for previous years Cash ISA contributions to be converted to stocks and shares, and vice versa, this has no impact on the current years’ allowance.
A stocks and shares ISA can hold many different types of investment. Permitted investments include:
When looking at this type of ISA you need to decide on whether you will buy and sell the individual assets (self-select ISA) or whether you will outsource this to a provider.
As part of our planning process we would look to utilise clients ISA allowances each year to enable them to build up liquid tax free savings. When a client has used up their annual allowance, they would generally then be looking to invest through other tax wrappers such as a General Investment Account (GIA).
A GIA is effectively the same as an ISA apart from: their tax treatment, there are no limits on investment amount, and they can be held jointly (unlike an ISA).
Both ISA and GIA are available through our supported platforms.