An ISA (Individual
Savings Account) is a tax-efficient way to save via Cash ISA or invest into a
Stocks and Shares ISA. Each tax year you get an annual ISA allowance, which is
the maximum amount you can save or invest tax efficiently.
The ISA allowance for
the 2016/17 tax year is £15,240, which will be increasing to £20,000 on 6 April
In April 2016 new
flexible ISA rules were introduced by the Government. These new rules now mean
it is possible for you withdraw money from your ISA and reinvest it back in the ISA as
long as it’s within the same tax year, without it counting towards your annual
Only UK residents can
open an ISA. You have to be aged 16 or over to open a Cash ISA and 18 or over
to open a Stocks and Shares ISA. You’re unable open an ISA for someone else
unless you have a registered power of attorney.
Types of ISA available:
A Stocks and Shares ISA – offered through our Elevate Platform
This ISA allows you to
invest your money in anything from government and corporate bonds funds to
individual shares or funds such as unit trusts or investment trusts.
This is a tax efficient ISA,
you won't pay Capital Gains Tax on any gains or further tax on any income which
might be generated.
A Cash ISA*
This ISA is similar to a
bank or building society savings account. However, any interest earned is free
of tax. Several types of Cash ISAs are available ranging from ISAs where you
can gain instant access to your money to fixed term and notice accounts.
An Innovative Finance ISA*
This was introduced in
April 2016 to allow Peer-to-Peer lending to benefit from the tax efficiencies
of ISAs. Peer to peer lending cuts out
the middle man, by allowing investors to lend all or some of their ISA
allowance directly to borrowers - providing loans to individuals and to small
However, the Innovative
Finance ISA isn't currently protected by the Financial Services Compensation
Scheme (FSCS). This means that you wouldn’t be able to
claim under the FSCS if a borrower defaulted on their loan repayments to you. There's
no guarantee that you'll receive all your money back.
You can have one Stocks
and Shares ISA, one Cash ISA, and one Innovative Finance ISA per tax year. If
you decide to open a Help to Buy ISA this will count as your
Cash ISA for the time you're paying into it. However you can only ever have one
Help to Buy ISA and this cannot be opened in the same tax year as a Cash ISA.
Your yearly ISA
allowance of £15,240 can be split however you like between your three different
ISAs depending on your preference.
The tax year runs from
the 6 April through to 11:59pm on the 5 April the following year, this allows
you a whole year to make the most of your tax efficient allowance.
Tax benefits may change
in the future. The value of your investments inside a Stocks and Shares ISA can
go down as well as up. This means you could get back less than you invest. You
should consider investing for at least 5 years.
Please note that the value of investments can go down as well as up and
are not guaranteed. You could get back less than you invest. AXA Wealth doesn’t
currently offer a Cash ISA, Innovative
Finance ISA or the Help to Buy ISA.
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