ISA’s – The Basics
Since their introduction in April 1999, ISA’s – Individual Savings Accounts – have become extremely popular because they are one of the most tax efficient investment products widely available to investors.
ISA’s are a special Government approved tax shelter for personal savings and investments. An ISA is a tax efficient “wrapper” containing different kinds of qualifying investments, in just the same way as PEP’s contain various types of qualifying stocks and shares, unit trusts and investment trusts. As with PEPs, the proceeds will be free of both income tax and capital gains tax, however, from 2004 ISA’s will cease to be able to recover tax deducted from UK dividend income.
All ISA’s are set up according to strict rules laid down by the Inland Revenue. These rules state, broadly, that ISA’s can be made up of the following 3 components: Cash, Stocks and shares, and Life Assurance.
Cash.
The cash component may include bank or building society accounts and national savings products.
Stocks and Shares
The stocks and shares component may...
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