If you managed to make use of your Individual Savings Account (ISA) allowance in the last tax year, then you will be pleased to know that as of 6th April, you have another £7,200 of potential tax free investments in which you can deposit into ISAs.
If you failed to invest anything, don’t worry, because by investing now you can take full advantage of the 2009/10 tax year and enjoy tax free interest on cash ISAs, and earn unlimited tax free earnings from investment/stocks and shares ISAs.
If you haven’t yet considered ISAs as a method of saving, you could be missing out on tax free returns, so it is well worth looking into opening an ISA.
ISAs give UK savers a great incentive to save, by offering a tax-free haven so you don’t have to pay a penny of the returns you earn to the tax man. All individuals aged 16 and over can apply for an ISA, giving them the opportunity to invest upto £7,200 each tax year and earn tax free returns on their investment. The ISA allowance can be made up of either up to the full £7,200 in an investment ISA, or up to £3,600 in a cash ISA, and up to the remaining amount in an investment ISA.
Think of cash ISAs like a savings account, offering all of the features you would expect to see in a number of types of savings accounts, but with the difference being that you don’t have to pay any tax on the returns on your investment. It is important to remember that all stocks and shares dealings carry some kind of risks, so as well as making great returns, there is also the possibility that you could make a loss.
You can decide on a number of factors to define how your ISA is managed, by the ISA provider you choose from, which includes how often and where you returns are paid, to the frequency of deposits you make. You can decide how you want to make deposits, whether they be monthly, or a annually, as long as you try to use up your allowance, as it cannot be carried over to the next year. Interest can also be paid monthly or annually, adding it to your current balance, or having it paid into another account.
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