ISAs
NB - Legislation relating to Individual Savings Accounts is subject to change.
Individual Savings Accounts (ISAs) are available to all UK residents over 18 years of age, 16 years of age for Mini Cash ISAs or the cash component of a Maxi ISA. They benefit all taxpayers, as any income or capital gains received from investments held within an ISA do not have to be declared to the tax man.
ISAs were introduced in 1999 and replaced PEPs and TESSAs, but if you have one of these accounts, you can keep PEPs indefinitely and TESSAs until maturity. Furthermore, if you have a maturing TESSA you can rollover the original capital (without accrued interest) into a TESSA only ISA without affecting your ISA allowance in that tax year.
ISAs can invest in cash or longer term investments like stocks and shares (including unit trusts, investment trusts, Open Ended Investment Companies, some fixed interest securities, or any share quoted on a stock exchange recognised by the Inland Revenue.)
Investment Limits
Mini ISA - There are two types of Mini ISA, a Mini Cash ISA in which you can invest £3000 per tax year and a Mini Stocks and Shares ISA in which you can invest £4000. The division of holdings is inflexible but you can have each Mini ISA with different providers and are therefore free to shop around for the best Cash ISA rates.
Maxi ISA - You can invest £7000 per tax year in a Maxi ISA and there is no upper limit on the stocks and share holdings. Therefore your entire holdings can be in stocks and shares. However the upper limit is still £3000 in cash. The main differentiator is the flexibility in the division of holdings. The Maxi ISA is one account and managed by one provider therefore you would have to have the cash ISA rates offered by this provider. Maxi ISAs are generally the best option for those who want the majority of their holdings to be in stocks and shares.
You can invest in one Maxi ISA or one Mini Cash and one Mini Stocks and Shares ISA in the same tax year.
See Also:
Self Select ISAs
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