ISA - Individual Savings Account.

ISA - Individual Savings Account

• An ISA is a ‘wrapper’ designed to go around an investment, to make it more tax-efficient.
• There are two types of ISA investment:
  • Stocks and shares ISA: this gives you the chance to invest your money in equities, bonds or commercial property without paying personal tax on any returns you might make.
  • Cash ISA: this is like a normal deposit account - except that you pay no tax on the interest you earn.
• The ISA limit for 2013/2014 is £11,520. You can invest the full amount into a stocks and shares ISA or you can invest up to £5,760 into a cash ISA and the balance into a stocks and shares ISA. 
• The annual ISA allowance is for every eligible adult. This means a husband and wife, for example, could put up to £23,040 between them into ISAs this tax year.

The chart below is an example of how you can split your ISA investments.

Risk factors

• The tax efficiency of ISAs is based on current rules. The current tax situation may not be maintained. The benefit of the tax treatment depends on individual circumstances.

Stocks and shares ISA

• Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed.
• You may get back less than you invest.
• Although there is no fixed term you should consider stocks and shares ISA and unit trust investments to be medium to long term, ideally five years or more.

Junior ISA

• Please remember the value of your child’s investment may fall as well as rise and is not guaranteed. This means it may be worth less than the amount invested.
• The money invested in a stocks and shares Junior ISA is locked away until your child becomes 18 and then rolls up into an adult ISA. You should consider it to be a medium to long-term investment, ideally of five years or more.

Cash ISA

• Our Structured Deposit Bond has a fixed term of six years. If you need access to your money before this period ends you may get back less than you originally invested.