Guide to ISAs

ISA stands for Individual Savings Account. An ISA is simply a tax wrapper around a product, for example a unit trust, that makes it more tax-efficient. For more information about unit trusts, see What is a unit trust?

ISAs were introduced by the Government to encourage more people to save. Investing in an ISA allows you to shelter your money from the taxman, as you can keep all the proceeds that you receive from that investment without paying income or capital gains tax.

You don't even have to declare your ISA on your tax return.

Tax assumptions are those currently applicable and are subject to statutory change. The value of the tax advantages will depend on your individual financial circumstances.

To invest in an ISA you have to be aged 18 or over (16 for certain cash ISAs) and ordinarily resident in the UK for tax purposes. You cannot hold an ISA jointly.

Under current UK tax rules, all ISA investments are free of personal income and capital gains taxes. The value of the tax advantages will depend on your individual financial circumstances.

The underlying ISA product may have to pay tax which would not be reclaimable, you can contact your ISA provider for details.

ISAs offer you the flexibility to invest from as little as £50 a month, up to the current annual limit of £7,200, all of which can be invested in stocks and shares.

Remember that once you have invested the maximum amount allowed in any tax year, you cannot invest any more, even if you have withdrawn some money from your ISA during that tax year.

A unit trust is simply a pool of individual investors' money, which buys a spread of investments.

The trust is then divided into units. The number of units you buy represents your share of the trust.

You may want to consider investing directly into a unit trust if you have already used up your ISA allowance for this tax year. Unit trusts are not tax free, and there is no limit to the amount you can put in, however, the maximum investment online is £50,000.

There are limits on the number of ISAs you can take out each year. You have an annual ISA investment allowance of £7,200 and you cannot exceed this. You can invest all £7,200 in a stocks and shares ISA, or up to £3,600 in a cash ISA and the remainder of the £7,200 in a stocks and shares ISA.

However, you can still hold onto ISAs from previous tax years. So you may end up with several ISAs.

The insurance component ceased to exist from 6 April 2005. It now forms part of either the cash or stocks and shares component of an ISA.

No, there is no time limit. You qualify for the tax advantages immediately. However, if you are investing in a Legal & General ISA, you should bear in mind that this is a medium to long term investment (at least five years). Refer to your original key document to check if your investment has any withdrawal fees.

You may withdraw amounts of £500 or more from your investment at any time, providing a minimum of £500 remains invested. Alternatively, you can sell all your units. If you wish to make a withdrawal or fully encash your investment, contact us by either of the following:

Telephone: 0870 050 0955
We may record and monitor calls. Call charges will vary.

Post:
Legal & General Retail Investments
Customer Services Centre
PO Box 1004
Cardiff CF24 OYS

If you are registered to our servicing site, you can sell your investment online. If you place a deal by telephone, this must be confirmed in writing before any payment will be made. Payment will then take place following the later of:

a) four business days after receipt by Legal & General of your request to withdraw units;

b) receipt of your written instructions and/or any other documents required.

Our range of options available online are listed below.

1. Legal & General Index-Tracking ISA
2. Legal & General Income ISA
3. Legal & General Actively Managed ISA
4. Legal & General Ethical ISA
5. Legal & General Multi Manager ISA

There are a number of ways you can apply for a Legal & General ISA:

• Apply online
• Apply by phone
• Request a pack

You can transfer from a cash ISA to a stocks and shares ISA, but not from a stocks and shares ISA to a cash ISA. If you transfer from a cash ISA to a stocks and shares ISA in the same tax year, any amount you have contributed will count towards your stocks and shares allowance rather than your cash allowance.