Compare Individual Savings Accounts (ISA) - Shares and Cash

Type	Min Investment	Type of Investment	Information	Product Reviewed
Ethical ISA	£50	Shares	Legal & General’s Ethical Trust tracks the FTSE 350 Index* excluding businesses in the Index that don’t meet certain ethical criteria. Invest from just £50 a month or £500 lump sum but remember that the value of your investment may fall as well as rise and is not guaranteed. You should consider investing in the Ethical Trust as a medium to long term investment of at least five years. Legal & General (Unit Trust Managers) Limited has been licensed by FTSE International Limited to use the name of "FTSE 350 Index”. Apply Online here	Add your Review here and receive a Free Gift
F&C Investments	£50	Shares	Don’t waste this year’s tax-efficient ISA allowance. Save money too - request F&C’s ISA brochure and receive a free moneysaving tips guide. With a range of 13 trusts to choose from, our investment trust ISA can really see your money grow. Try something different this year. Find out more	Add your Review here and receive a Free Gift
Income ISA	£50	Shares	If you want to invest in fixed interest securities such as corporate bonds, Legal & General has a choice of funds with varying levels of risk, all focused on returning a reliable income. Invest online from just £50 a month or £500 lump sum. Remember your investment is not guaranteed and the value may fall as well as rise. Apply Online here	Add your Review here and receive a Free Gift
Alliance and Leicester	£1	Premier Current Account with Premier ISA	Tax-Free Savings with a great rate when you open a Premier current account.  Earn 10.00% gross p.a./AER (variable) when you open and arrange to pay in your main income each month to a Premier Current Account, Tax-free savings with no notice for withdrawals. 24/7 access to your Premier ISA Issue 2 via Telephone and Internet Banking. Linked to your new Premier account for easy access and quick transfers.  For more information, please click here	2 Reviews Add your Review here and receive a Free Gift
Index Tracking ISA	£50	Shares	With a tracker ISA from Legal & General you can take your pick from nine different funds investing in a range of countries and sectors. Take advantage of low annual charges currently from just 0.53% of the fund value and invest online from just £50 a month or £500 lump sum. Remember your investment is not guaranteed and the value may fall as well as rise. Apply Online here	Add your Review here and receive a Free Gift
Actively managed investments	£50	Shares	Benefit from the expertise of Legal & General's professional fund managers. Choose from a wide range of 12 actively managed funds which could give you the flexibility to construct a varied investment portfolio. Invest in an active fund online from just £50 a month or £500 lump sum. Remember your investment is not guaranteed and the value may fall as well as rise. Apply Online here	Add your Review here and receive a Free Gift

• ISA Explained
• Types of ISA
• Savings and investment limits for ISA
• Mini ISA
• Maxi ISA
• Cash ISA
• Stakeholder ISA
• How much tax will you save?
• Who can open an account?
• Changes from 6 April 2008 ISA and Peps

ISA Explained

Individual Savings Accounts (ISA) allow people to save their money in a range of investments such as cash, stocks and shares. Unlike investing directly in these products, investing through an ISA provides certain benefits.

An ISA is often referred to as a “tax wrapper” which goes around your savings, protecting them from paying certain taxes.

What can you save or invest in an ISA

• you can save cash in an ISA and the interest will be tax-free
• you can invest in shares or funds in an ISA and any capital growth and dividend income will be tax-free.

Types of ISA

An ISA can be made up of an investment in cash, or longer term investments like stocks and shares or insurance. In each year you can either invest in one Maxi ISA, which can include all of these types of investments, or you can have two Mini ISA – one for cash and one for stocks and shares, which can both include insurance.

You cannot invest in both a Mini ISA and a Maxi ISA in the same tax year.

Savings and investment limits for ISA

The most you can save and/or invest in a tax year is £7,000. The government has said that the limit will stay at £7,000 until April 2010.  Any money you put into a TESSA-only (a tax-free savings scheme prior to ISA) ISA does not count towards your limit.

Mini ISA

There are two types of Mini ISA - a cash ISA, and a stocks and shares ISA. You can open each ISA with a different ISA manager if you prefer to. The amount you can invest in each tax year (6 April to 5 April ) is fixed. You can invest up to:

• £3,000 in a cash ISA, and
• £4,000 in a stocks and shares ISA.  

You cannot invest in more than one Mini cash ISA, or more than one Mini stocks and shares ISA in the same tax year.  Please read the new rules starting April 2008.

Maxi ISA

A Maxi ISA can include both cash and stocks and shares. However, whichever way your investment is split, it counts as one Maxi ISA. So you can only open one Maxi ISA in each tax year. The total amount you can invest is £7,000 each tax year (6 April to 5 April). You can invest up to £3,000 of this in the cash element. Please read the new rules starting April 2008.

Cash ISA

Like regular savings accounts, some providers offer different types of Cash ISA. Some providers will offer instant access to money with no penalty or loss of interest. Some other providers have restrictions, such as a fixed term or require notice to be given before money can be withdrawn. If a withdrawal is made within a fixed period then a penalty or loss of interest may result.

Stakeholder ISA

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New stakeholder products have now become available. To earn the name 'stakeholder' the products have to meet conditions designed to ensure that the products are straightforward and good value.

There are five stakeholder products:

• stakeholder deposit
• stakeholder medium-term investment product (MTIP)
• smoothed MTIP
• stakeholder pension
• child trust fund stakeholder account

How much tax will you save?

Interest from savings:

• if you pay tax at the basic rate, you would usually pay 20 per cent tax (2007/8) on your savings interest
• if you pay tax at the higher rate, you would usually pay tax at 40 per cent

Dividend income: 

• if you're a starting rate or basic rate taxpayer you pay tax at 10 per cent on dividend income; this is taken as a 'tax credit' before you receive the dividend and cannot be refunded for ISA investments 
• if you're a higher rate taxpayer you would normally pay tax on dividend income at 32.5 per cent; you won't get back the 10 per cent dividend tax credit element of this, but you will save tax on the remaining 22.5 per cent

CGT savings:

If you make gains of more than £8,800 from the sale of shares and certain other assets in the tax year 2006-2007 you would normally have to pay Capital Gains Tax (CGT). However, you do not have to pay any CGT on gains from an ISA. (But losses on ISA investments can't be used to reduce CGT on gains from investments outside the ISA.)

Who can open an account?

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To open an ISA individuals must be 18 years old or over. However, if an individual is aged 16 and over they are entitled to open a Mini Cash ISA or the cash component of a Maxi ISA. Individuals must be UK residents for tax purposes. People working abroad or Spouses and Civil Partners of individuals working abroad, for example Civil Servants or Armed Forces who are paid by the British Government, are also entitled to open an ISA. 

Changes from 6 April 2008 ISA and Peps

The main changes that affect ISA and PEPs are:

• All PEPs will automatically become stocks and shares ISA. 
• The total amount you are allowed to invest in an ISA each year is increasing to £7,200 from £7,000. 
• The entire £7,200 can be invested in a stocks and shares ISA. Or you could decide to invest up to £3,600 in a cash ISA with one provider with the rest being invested in a stocks and shares ISA through the same or another provider. In a stocks and shares ISA you are invested directly in stocks and shares or through a fund that is. Cash ISA are primarily offered through Banks and Building Societies. 
• Mini and Maxi ISA will no longer exist - there will simply be cash ISA and stocks and shares ISA. 
• Money in a cash ISA can be transferred into a stocks and shares ISA. 
• When ISA were launched by the Government in 1999 they were guaranteed to be available until 2009. They’re now going to be available indefinitely.  

Using ISA to save for your children's future

According to the latest research from F&C Investments, the average family do not use up their ISA Allowance.  If you haven't paid into your ISA this year, you can use this allowance to save upto £7,200 from April 2008.  The ISA must be in your name until your children reaches 16 thereafter they can open up an ISA cash account in their own name.

To find out how you invest in an ISA for your children's future, please speak to Steve where he'll be happy to help you. 

Steve Weisner
Independent Financial Adviser
Radcliffe & Newlands
5th Floor Crystal Gate
28-30 Worship Street
London
EC2A 2AH

Email: sweisner@rad-new.com
Tel : 020 7382 0437
Fax : 020 73740462  

Other related articles from MyEggNest

Child Trust Fund Overview 
Children's Bank and Building Society Accounts
National Savings and Investments (NS&I)
Friendly Societies
Children's Stakeholder Pensions
ISA and Parents Reviews

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