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This website contains information which may or may not be applicableto your own situation and circumstances.
Any information or advice on this site does not constitute a personal recommendation. If you have any doubts as to whether a product or service is suitable for you, please seek independent advice.
ISA Advice
On 6 April 2008 new ISA rules came into effect:
- The annual ISA allowance increased to £7,200 and the distinction between maxi & mini ISAs was removed.
- There will simply be two types of ISA; a cash ISA and a stocks & shares (S&S) ISA.
- You will be able to invest up to £3,600 in a cash ISA during each tax year and the balance can be invested in a stocks & shares (S&S) ISA. For example, if you invest £1,000 into cash then you may invest £6,200 (£7,200-1,000) into S&S.
- In addition, Personal Equity Plans (PEPs) will become S&S ISAs, and you will be able to transfer cash ISAs into a S&S ISA, which you have not previously been allowed to do.
It is possible for you to make withdrawals from your ISA at any time without loss of tax relief However, once the maximum amount has been subscribed to an ISA in a year, no further investment will be allowed that year, regardless of how much is withdrawn.
Things to consider
With cash ISAs the highest interest rate is not always the best. Some banks attract savers into top of the table interest rates, only to drop their rates later or fail to increase them when other providers increase theirs.
Base rate tracker ISAs will follow the Bank of England rate and often offer a better deal. With S&S ISAs, never forget that past performance tells you only one thing: what has done well in the past.
The most important thing is to use your ISA allowance each year if you can by 5 April. Once gone it is lost forever.
Regular contributions
You don't have to invest your money all in one go.
Most ISAs offer regular savings plans - which is a superb way to capitalize on market volatility.
Falling markets allow you to buy units in your chosen funds at lower prices, so if the market eventually regains its lost ground they will count for much more.
If the current market volatility is making you nervous, don't forget some ISA managers also allow you to hold cash within your ISA, so you can secure this year's allowance and choose where to invest later.
You might even get a high fixed interest rate for any new money you invest.
So what about your existing ISAs?
In effect the new rules will make very little difference to any ISAs you already hold, although there can be a significant change for the tax on cash in PEP’s that are being converted.Stakeholder Standards
These are a specific type of ISA, which meets Government guidelines covering cost, access and terms. Both types of ISA components can qualify for a Stakeholder standard. The cost limit varies with each investment type and the access and terms criteria specify that investors must be able to get their money back at any time without penalty and with no other restrictions.
Because of these limits, Stakeholder standard Stocks and Shares ISAs are designed to meet the needs of a wide range of investors. For this reason, they may be less appealing to experienced investors who want to maximise their long-term growth potential and are therefore more likely to seek specialist funds.
The presence or absence of a Stakeholder standard cannot predict whether an ISA will prove to be a good or bad investment. A Stakeholder standard ISA has not received Government approval of any kind, nor is your money or investment return guaranteed by the Government in any way.