Each individual has an ISA (Individual Savings Account) allowance of up to £7200 which can be invested each tax year. This allowance can be invested fully into "stocks and shares" as an Equity ISA, or split into two separate elements, Equity and Cash. As of 6th April 2009 up to £3600 can be invested into a cash ISA. The annual limit for savers aged 50 or more increases on 6th October 2009 to £10,200 of which upto £5,100 can be in Cash.

Cash ISA is a risk free, tax free account which can be instant access but still pay about 5% tax free interest currently.
These “investment” are usually made via a Bank or Building society of your choice and if you are saving for something shorter term this is an excellent return so why not take advantage of it?

The Equity version of the ISA allowance is often made via a Life Assurance company or an Investment House and the important thing to bear in mind is the much used phrase “the value of the plan is not guaranteed and can go up and down depending on investment performance”.

As a compliment to existing or indeed new Pension arrangements the Isa allowance should not be overlooked due to its extreme flexibility and accessibility.

1. There is no specific investment or saving term, they are open ended.
2. Regular savings can usually be stopped or reduced with no disadvantage.
3. Within overall Government limits you can invest additional amounts at any time.
4. You can dictate the level of income or lump sum withdrawals at any time.

Tax rules may change, the value of any tax relief depends on the financial circumstance of the investor.

The value of an investment is not guaranteed and can go up and down depending on investment performance. You could get back less than you have paid in.

NOTE.
Equity ISA’s can be invested solely into “individual shares” within an ISA wrapper or as part of a “collective investment” where the core investment is a Unit Trust, OEIC or Investment Trust.

Most Unit trusts are currently being converted to Open Ended Investment Companies which are generally referred to as OEIC’s.

Please be aware that these “guidance notes” have been kept as short as possible and are meant purely as an introduction to investments.
Harris & Associates would advise anyone considering investing capital, as a single lump sum or on a regular basis to seek professional and qualified advice.

Harris & Associates Financial Consultants Ltd is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Services Authority

Tax planning is not regulated by the Financial Services Authority