ISA information
The ISA options
What is an ISA?
An ISA is a tax-efficient “wrapper” in which you can hold either stock market-based investments or a traditional savings account. Any interest earned on savings or bonds and any capital gains made on investments within an ISA are tax-free.
What’s the right ISA for you?
With so many options available and complicated rules to understand, you could be missing out if you haven’t invested in an ISA. But don’t worry. Whether you know nothing about tax-free savings or you know it all, at Norwich and Peterborough Building Society we make ISAs easy.
Let N&P help you make the most of your 2008/9 tax-free savings allowance.
New ISA Rules for 2008/9
Although the 2008/9 tax year brings with it yet another new set of rules and regulations, there is no reason to feel daunted. This is because this year’s changes are designed to offer you certainty, flexibility and simplicity. Which means more tax-free opportunities for you.
Firstly, and possibly best of all, the Government has confirmed its commitment to the future of ISAs by stating that ISAs will be available indefinitely, giving you more opportunity to make higher returns over a longer period.
Next, your annual ISA allowance will increase from £7,000 to £7,200, with the cash ISA limit rising from £3,000 to £3,600. These amounts are larger, so they help you to maximise your tax-free savings. They are also easily divisible by 12 – helping you organise your savings into set monthly amounts, if you prefer to save regularly.
What will happen to your existing ISA investments?
• Maxi and Mini ISAs will become a thing of the past. Instead, there will only be two kinds of ISAs: Cash ISAs, and Stocks and Shares ISAs.
• Mini Cash ISAs, TESSA-only ISAs (TOISAs) and the cash component of a Maxi ISA will automatically become Cash ISAs.
• Mini Stocks and Shares ISAs and the stocks and shares component of a Maxi ISA will automatically become Stocks and Shares ISAs.
• You will be able to transfer any previous years’ Cash ISAs into Stocks and Shares ISAs without affecting your current year’s subscription.
• You can also switch Cash ISA money into a Stocks and Shares ISA in the same tax year, but only up to your new 2008 annual limit.
• Any existing PEPs you own will become Stocks and Shares ISAs. This transfer will happen automatically and will not affect your 2008/9 tax-free allowance.
How your new allowance works
Firstly you have to be 18 or over to invest in a Stocks and Shares ISA (16 or over for a Cash ISA) and secondly you must be a UK resident. So long as you fulfil those criteria, your options are as follows:
From 6 April 2008, you will be able to invest in one Cash ISA and/or one Stocks and Shares ISA each tax year up to your new allowance of £7,200. You can do this by paying up to £3,600 into a Cash ISA and the balance (up to your allowance of £7,200) or the full amount of £7,200 into a Stocks and Shares ISA.
So, for example, you could choose to:
• Save £3,600 in a Cash ISA and £3,600 in a Stocks and Shares ISA
• Save £2,000 in a Cash ISA and £5,200 in a Stocks and Shares ISA
• Save £7,200 in a Stocks and Shares ISA
Other information to note:
• You can choose a Cash ISA and a Stocks and Shares ISA from the same or different providers
• A husband and wife can have one ISA each, but ISAs cannot be held in joint names
• You can transfer any existing ISAs you hold with another provider to N&P