Cash ISA's

These types of ISA's can be purchased through most Banks and Building Societies, on the High Street or via the internet. Cash ISA's provide a tax efficient savings environment that is free of any Capital Gains Tax and Income Tax. They can provide fixed interest or variable interest (subject to Provider and Product chosen). Most provide instant access however please ensure you seek advice from the product provider before purchasing a Cash ISA to ensure their criteria meets your personal requirements.

The Government limits the amount of investment into a Cash ISA of £5,340 (2011/12).

Equity ISAs 

Sometimes referred to as a ‘stocks and shares ISA’, replaced PEPs in 1999, and allow you to invest in areas such as investment trusts, Unit Trusts or OEIC’s (Open Ended Investment Companies) in a more tax efficient way. ISA’s are generally considered to be a medium to longer-term savings plan, and offer investors tax benefits from a considerable range of ISA products.

Since the Government is keen to encourage people to save, ISA’s are free of Capital Gains Tax and Income Tax liability, but there is a limit to how much you can invest.

The Government limits the amount of investment into a Equity ISA of £10,680 (2011/12).
Please be wary, as any investment into a Cash ISA during a tax year will limit the amount you are allowed to invest in an Equity ISA.

ISA’s can be invested in by way of one-off lump sums, multiple lump sums or smaller regular payments. If you choose to invest in ISA’s by making regular payments, you have the potential to benefit from ‘pound-cost averaging’. In short, this helps to smooth out some of the ups and downs of the stock market, by purchasing more shares in stocks when the prices are low, and less when the prices are high.

ISA's were originally going to run to 2009 but the Government have announced they will be available indefinitely.

Equity ISA's also provide instant access however you need to consider these schemes as Mid-Long term investments to cater for any charges that may apply.

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