INDIVIDUAL SAVINGS ACCOUNTS (ISAs)

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As Independent Financial Adviser we can help you select the most suitable ISA for your circumstances by completing our fact find and telling us a little bit more about you. Click here for Independent Financial advice.

What is an ISA?
ISAs are a new form of tax-free shelter or 'wrapper' in which you can place your investments to give them tax-free status. There is a limit on the amount you can invest each year. The ISA 'wrapper' will contain one or more of the following ISA components:

• Investment Component - known as 'stocks and shares' this will contain collective investments such as unit trusts and/or individual shares.
• Cash Component - will contain bank or building society deposits, National Savings or cash unit trusts.
• Insurance Component - will be certain types of life insurance.

What are the different types of ISAs?
There are different types of ISAs to choose from.

The MAXI ISA invests in one, two or three of the ISA components all with the same manager in any one tax year. This manager does not have to provide all three components of the ISA.

The MINI ISA offers separate managers for each of the components in each tax year. NOTE you can only invest in either a MAXI ISA or a MINI ISA in each tax year.

How do the ISA limits work and how much can I invest?
You can invest a maximum of £7,000 each tax year. As well as this restriction there are restrictions on how much can be placed into each component. Below is a table showing what these are:

How easily can I get access to my investments?
As there is no 'lock-in' period for ISAs, you can withdraw money at any time without losing tax advantages on your investment. However, you should also ask any ISA manager if their product includes penalties or additional charges for early withdrawal, and whether you need to leave your money invested for a minimum period in order to qualify for the best rates.

What are 'CAT' standards?
The government has introduced some standards for ISAs to help some investors choose their investment. CAT stands for Cost, Access and Terms. There are different CAT standards for each component of the ISA and there is no requirement for every ISA to meet the standards.

The key feature document issued to investors will have to clearly state whether or not an ISA has met the CAT standards. Meeting the standards is not an indication that a particular investment will be good or bad but simply that it has a certain level of charges and access and a low minimum investment.

CAT standards are:

• NOT a Government endorsement of a product
• NOT a guarantee
• NOT an indication of a superior product - A CAT standard product may do better or worse than a non CAT standard product
• NOT necessarily an indicator of good investment performance - Many of the best performing and most popular funds may not be to CAT standard.
• NOT a specific recommendation that a product is right for you
• NOT a substitute for advice from a qualified adviser

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