ISA information

• What is an ISA?

  ISA stands for Individual Savings Account. ISAs were introduced by the Government to encourage more people to save for the future. Investing in an ISA allows you to keep all the gains or income received without paying any personal taxes such as income or capital gains tax. You don't even have to declare your ISA on your tax return. You can invest up to £7,200 per tax year, which runs from 6 April to 5 April the following year.

  There are two types of ISA, a stocks and shares ISA and a cash ISA.

• What's the difference between a stocks and shares ISA and a cash ISA?

  Stocks and shares ISA

  A stocks and shares ISA allows you to invest up to £7,200 each tax year. Your allowance will usually be entirely invested in equity based investments. Nationwide offers 6 funds for you to choose from, all provided by Legal & General. You can invest in just one or spread your investment across more than one.

  Cash ISA

  A cash ISA gives you the flexibility to invest up to £3,600 of your annual ISA allowance into a deposit based account.

  If you choose the cash ISA option you may invest your remaining ISA allowance in a stocks and shares ISA. You can use a different provider for each one.

• Who is allowed to invest in an ISA?

  To invest in an ISA you have to be aged 18 or over (16 for all cash ISAs) and ordinarily resident in the UK for tax purposes. You cannot hold an ISA jointly.

• What are the tax benefits of an ISA?

  Under current UK tax rules, all ISA investments are free of personal income and capital gains taxes. The underlying ISA product may have to pay tax which would not be reclaimable.

  This is based on our current understanding of current tax legislation and HM Revenue & Customs practice, both of which may change. The value of the tax advantages will depend on your individual financial circumstances.

• How much can I invest in an ISA?

  There are two approaches you can use to invest your £7,200 annual allowance. You can either invest your entire allowance in a stocks and shares ISA, or invest some in a cash and some in a stocks and shares ISA. The maximum that you can invest in a cash ISA is £3,600, so if you take this approach you can only put up to £3,600 in a stocks and shares ISA. You can hold a cash ISA with one provider and a stocks and shares ISA with another.

  So for example, you can choose to save £3,600 in a Nationwide cash ISA and £3,600 in a Legal & General stocks and shares ISA offered through Nationwide, or £2,000 in a cash ISA and £5,200 in a stocks and shares ISA.

  The chart below summarises your ISA investment options.

  

• What are my ISA options with Nationwide?

  You can save from £1 to £3,600 in our cash ISAs.

  Lump sum investment in a Legal & General stocks and shares ISA (offered through Nationwide) can be from £20, up to the current annual limit of £7,200 minus any contributions made to a cash ISA. You can also invest monthly from only £20.

  Remember that once you have invested the maximum amount allowed in any tax year, you cannot invest any more, even if you have withdrawn some money from your ISA during that tax year. If you have more to invest you may wish to consider a unit trust investment - this means investing in the same funds as under an ISA but without the same tax benefits.

• How many ISAs can I have?

  Although you are restricted as to how many ISAs you can open in any tax year, you are not restricted as to how many you can hold that were opened in previous tax years. So over time you could end up with several ISAs.

  It is also worth noting that you are now able to transfer any existing cash ISA balances from previous tax years into a stocks and shares ISA without it counting towards your annual allowance.

  Once funds are transferred from a cash ISA to a stocks and shares ISA, they cannot be transferred back.

• How long should I invest for?

  There is no time limit. You qualify for the tax advantages immediately. With instant access cash ISAs you can withdraw on demand, however some products may have different terms with better rates e.g. cash ISA Bonds that have a fixed term and may have penalties for early withdrawal. If you are investing in a stocks and shares ISA, you should bear in mind that this is a medium to long term investment (at least five years).

• What if I've used up my ISA allowance?

  You may want to consider investing in a unit trust (i.e. outside an ISA) if you have already used up your ISA allowance for this tax year. In that case your investment doesn't benefit from the same tax favoured treatment as it will when held in an ISA, but there are no limits on the amount you can hold as a unit trust investment. You may be liable for income tax and capital gains tax on any fund income and capital growth, depending on your circumstances.

  Whether the ISA and or unit trust route is right for you, and whether you're investing a lump-sum or regular monthly amount, the minimum investment into each of the funds is £20. But we would encourage you to consider investing more than this if you're looking to make a meaningful commitment.