What are the most common questions about ISAs? James Robson clears up some of your most common queries.
1. What actually is an ISA?
ISA stands for individual savings account.Â It is a means of saving or investing that offers tax advantages.Â Interest in cash ISAs are paid tax free and investments can grow without capital gains tax or additional rate tax on dividends*.
2. Can I have an ISA?
Anyone who is a UK resident and over the age of 16 can have a cash ISA.Â Children can opt for a Junior ISA (which replaced child trust funds) and anyone over the age of 18 can have an investment ISA
3. Can I have a cash and investment ISA at the same time?
Yes, provided you stick to the limits of contribution you are able to open both types of ISA in the same year.Â The total limit this tax year (2013-14) is Â£11,520 of which a maximum of Â£5,760 can be in cash. The junior ISA limit is Â£3,720.
4. Can I have more than one investment ISA per year?
No, you can only subscribe to one investment ISA each year.Â You may have multiple accounts in different years but you can only save into one investment ISA per tax year.
5. Whatâs the difference between a cash ISA and an investment ISA?
A cash ISA is designed to hold cash â just like any other savings account but with tax advantages.
An investment ISA, or stocks and shares ISA has a wider range of options that it can hold. Most commonly these are unit trusts or open ended investment companies (OEICS) but they could also be individual shares or investment trusts.