ISAs: what you need to know - Michael Lansdell

Individual Saving Accounts (ISAs) are one of the most popular investment and savings tools being utilised in the UK today.

Over £443 billion has been invested in adult ISAs since their creation in 1999, and since Junior ISAs or JISAs were launched in 2011, they’ve seen more than £557 million in total deposits. With so many UK taxpayers opting in, opening an ISA can’t be a bad decision.

The key benefits of an ISA are its income tax and capital gains tax-free status and its flexibility for either cash or stocks and shares deposits investments. As both children and adults can have multiple ISAs, they are also a great way of helping secure your whole family’s future.

Unlimited transfers can go in and out of ISAs each year with no impact, and they also offer generous savings limits – in 2013/14, the individual allowances for an adult ISA and a JISA are £11,520 and £3,720, respectively.

ISAs are clearly a great investment option – as long as certain things are watched out for.

For example, if you’re moving to another provider, you need to make sure you do not withdraw the funds – rather, complete a transfer form in order to retain your tax-free status.

If you move abroad, you cannot continue putting money into your ISAs as you are no longer a UK resident for tax purposes.

And the ISA’s tax-free benefit is only applicable until death, after which the funds may be subject to inheritance tax.

When investing in an ISA, the key tip to keep in mind is to use as much of your allowance as affordable every year, as these do not carry over. And as with any investment, consulting with a professional before taking any action is always advisable.

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