ISA Benefits and Risks

ISA benefits

• An ISA allowance of £10,200 can help you build up a significant tax free investment to support you in retirement.

• An ISA can accept just about any investment and the investments in an ISA can change depending on your own circumstances. Through ISA management you can switch between funds and equities in the ISA whenever you want, while still retaining the tax free saving advantages.

• You can transfer previous Cash ISA plans into a Stocks and Shares ISA.

• In your 20s and 30s you can invest in "growth" ISA investments then in your 50s, 60s and 70s you can switch these into "income" producing ISA investments.

• Stocks & Shares ISAs are available to individuals aged 18 or over who are resident and ordinarily resident in the UK for tax purposes.

• You can take cash out of your ISA at any time to meet any financial need.

 

Tax benefits of ISAs

• All ISAs are tax free investments with no Income Tax on any income taken from the ISA.

• There is no CGT on any gains within an ISA.

• Interest paid on uninvested cash within the Stocks and Shares ISA is subject to a 20% HMRC flat rate charge. Interest received in a Cash ISA is tax free.

• Dividends from equities are paid with a 10% tax credit which cannot be reclaimed in a pension or an ISA but there is no additional tax to pay in either vehicle.

 

ISA risks

• Governments can and do change the rules on tax efficient vehicles, like ISAs.

• An ISA is not a risk free product and the value of your ISA investment may be at risk due to the investments held within the wrapper.

• ISAs can grow but depending on market conditions you may not realise the initial sum invested. There is no guarantee that you will get more out of an ISA investment than you have paid in.

• If you leave the UK and are no longer a UK resident then you can keep the ISA investment but you can't make any new contributions to the ISA.

• ISA investments are liable to Inheritance Tax on death.

• Income Tax deducted at source on foreign dividends may be recoverable, but the tax credits attaching to UK dividends are not. There are no further Income Taxes to be paid on investments held within an ISA.

 

What to do next

ISA Review Service: If you would like one of our qualified Brokers to review all your current ISA investments, without charge, please call us on 020 7337 0520.

Request our ISA Brochure: Read more about the Killik & Co ISA by requesting our free ISA brochure, electronically or by post.

ISAs explained: For further information about ISAs and tax free investments, please request your free copy of ISAs explained.