ISAs Explained
What is an ISA?
An Individual Savings Account (ISA) is a flexible, tax-efficient way to save or invest.
How the tax works
With an ISA, any growth on your investments is not subject to any income tax or capital gains tax, so you can really make more of your investments.
ISA investment options
You can hold a range of different investments or savings within an ISA, and there are limits to the amount you can save or invest in any one tax year.
We have made it easy for you to maximise your ISA investment allowance by being able to apply for the current and next tax year in one go. To maximise your ISA allowance, you can invest in the current tax year (2009/10) and the next tax year (2010/11) by completing a separate application form for next year, and posting both with one cheque. Legal & General will hold next year's allowance in a non interest bearing account, and open your ISA for 2010/11 on 6th April. Please note in order to do this you must print the same application form twice and complete section 2 with the appropriate tax year (i.e. 2009/2010 or 2010/2011).
Key dates: Use our timeline to see key dates in the run up to the end of the 2009/2010 tax year.
How much can I invest?
In the current tax year you can either invest your entire allowance, currently £7,200, in a Stocks & Shares ISA. Or, you could invest some in a Cash ISA, which is a deposit based account, with the remainder in a Stocks & Shares ISA. The maximum that you can invest in a Cash ISA is £3,600, so if you do this, you can only invest £3,600 in a Stocks & Shares ISA.
You can use the same or a different provider for both ISAs.
Changes to ISA limits
If you are topping up your ISA you can currently put up to £7,200 into a stocks and shares ISA, or use this allowance in conjunction with a Cash ISA. From 6 October 2009, anyone who will be aged 50 or over on or before 5 April 2010 can benefit from a higher limit of £10,200 of which £5,100 can be saved in a Cash ISA. You can also transfer existing Cash ISA balances from previous tax years. From 6 April 2010 the higher limits apply to anyone who is eligible to invest in an ISA.
Stocks & Shares ISA
Range of funds
Nationwide offers a range of funds for you to choose from, all provided through Legal & General. You can invest in just one, or spread your investment across a range of funds. If you want to invest more than the current ISA limit, you can put the rest in a Unit Trust/OEIC.
The chart below summarises your investment options and amounts:
Tax treatment is dependant on individual circumstances. The tax information provided is based on our current understanding of current law and HM Revenue & Customs practice which can change.