Best Isa - Your Guide To The Best ISA's On The Market

best isa accounts

best isa explained Finally, I have listed many of the most frequently asked questions about isas, which I hope will help you when come to choose the best isa for yourself. Some of these questions I have been asked myself whilst others have come from a variety of sources including the HM Revenue and Customs  web site so they will be right up to date with the new rules announced last year, and taking effect now. I have tried to group them by topic which I hope will help you find the answer you are looking for more quickly, and I have started  with questions concerning the new rules.

best isa - questions on new rules April 2008

Q: Are there limits on how much I can invest?

A: Because of the tax advantages of an Isa, the government sets limits on how much you can invest in a given tax year. In the current tax year (2008-2009) the maximum you can invest overall is £7,200.  Up to £3,600 of this limit can be invested into cash, with the balance being invested into stocks and shares.  Alternatively, you can put the whole £7,200 into a stocks and shares Isa.

Q: If I withdraw any money, can I put it back in the account later?

You can provided you don't go over the limit for the year. The limits apply to the money paid into the account, not the account balance.  For example, if you pay £1,000 into your cash Isa on 30 April 2008 and then withdraw it in June, you can still pay in a further £2,600 up to 5 April 2009. However, if you paid in the full £3,600 on 30 April 2008 and withdrew £1,000 in June you are still classed as having paid in the full amount for the current tax year, so you can't put pay in any more until the new tax year.  

Q: For how long will my ISA remain tax free?

Originally the government said Isas will continue until April 2010. However, it has now confirmed that Isas will remain indefinitely.  

Q: What happens to my PEP's

Since the demise of PEPs in 1999, no new subscriptions have been allowed, but rollover vehicles have been available for PEP transfers. From 6 April, all PEP investments will be re-classified as stocks and shares ISAs, and investors will be able to continue to contribute to them, taking advantage of the wider range of permitted investments in ISAs, so long as they are not contributing to another stocks and shares ISA in the same tax year. Your existing PEP can, if you wish, be merged with your existing ISA. If there is un-invested cash in the PEP, this will in future be taxed at 20%, as has always been the case with stocks and shares ISAs.

Q: Can I transfer proceeds from my stocks and shares ISA into my cash ISA?

A: No. Since the holdings in a stocks and shares ISA are free from capital gains tax, it would in theory be possible to sell them and reinvest the proceeds in a cash ISA which is why it is not permitted.

Q: What happens if I go abroad?

A: You can only open an ISA if you are resident and ordinarily resident in the UK for tax purposes. If you start an ISA in the UK and then go abroad, you cannot continue putting money into the ISA . However, you can keep your ISA and you will still get tax relief on investments held in the ISA. When you return, you can start putting money in again (subject to the normal annual limits)

Q: What can the stocks and shares isa include?

A: Stocks and shares isas can include any of the following -

Q: Can I open an ISA on behalf of my child?

A: No, you cannot open an ISA on behalf of anyone else. You must be at least 16 to open a Cash ISA, and 18 to open a Stocks & Shares ISA.

Q: What is the CAT mark?

Cat stands for Charges, Access and Terms. If an Isa carries the Cat mark it shows that it has met certain criteria laid down by the government. It does not offer any guarantee that the Isa itself will perform well. A Cat marked cash Isa may still not offer the best interest rate. Cat marks can therefore be useful but they are not the only guide to use when deciding who to trust with your money.

Q: Is it cheaper to buy direct or through a broker?

Not necessarily. If you use an independent financial adviser (IFA) to select your Isa, the provider will reward them for putting your business their way by paying them a commission which you will not see. Of the initial charges approx. 60% of these may go back to the introducer as commission, but if you go direct you will still pay exactly the same. Some financial advisors however do offer a cut of their commission back to you in the form of a rebate, so it is worth asking and checking if you are buying through a financial advisor.

Q: What if I invest in an ISA but then change my mind?

You are entitled to a cancellation period of 14 days if you invest through an authorised financial adviser. Your ISA manager will sell your investment, and repay you the proceeds and also refund any initial charges you have paid.

Q: Can I top up my ISA during the year?

A: Yes. Many people pay into their ISAs using a monthly direct debit, but you can top up at any time during the tax year, provided you have not exceeded the allowable limits.

Q: Do I have to keep my ISA for a minimum period?

A: No - you can sell all or part of it at any time, but once you have taken the money out, you cannot put it back in during the same tax year.

That's about it on how to go about finding the best isa accounts for you. I hope you found this site to be both useful and informative, and remember if you do need any help please just drop me a line via email. Thank you for getting this far, and I wish you every success in finding the best isa on the market. Remember there are many issues to consider, so please take your time and do your market research before signing on the bottom line. Now that the government has completed a U turn and agreed to their continued existence, I firmly believe they offer a solid tax free savings solution - you just need to pick the best isa available!!