An Individual Savings Account (ISA) is a tax-efficient wrapper. Within an ISA you pay no capital gains tax and no further tax on the income, making it one of the most tax-efficient savings vehicles available.
The earlier and the more you add to your ISA the better. But the crucial thing to remember is that every tax year – which runs from 6th April one year to 5th April the next year – you're only allowed to invest a certain amount in an ISA. This is known as your annual ISA allowance.
If you are planning to open or transfer an existing ISA, you have until 5th April, but don't leave it until this date. If you miss the deadline, you'll lose your £11,520 allowance for the 2013/14 tax year forever.
The Inland Revenue says your ISA application must have been received by your ISA provider and it must also have been processed to qualify.
Q: What types of ISA s are there?
A: There are two main types of ISAs: Cash ISAs and Stocks and Shares ISAs.
Q: What is a Cash ISA?
A: Cash ISAs work in the same way as normal savings accounts. You choose if you want a fixed rate account, an easy access (or instant access) account or a regular savings account. You don't pay income tax on the interest you earn. For every £1 of interest you earn on your savings, instead of the taxman pocketing 20p of income tax (if you're a basic rate taxpayer), you get to keep it all... Click Here to read further and download 'ISA Guide 2012/13'.
CFS Independent Financial Advisers Limited
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