Investing money needs careful consideration and you need to be absolutely sure of the risks involved. This section provides generic information on different types of saving & investment. You should seek advice appropriate to your specific circumstances prior to making any decisions.
Investors do not pay any personal tax on income or gains, but ISAs may pay unrecoverable tax on income from stocks and shares received by the ISA managers.
Tax treatment varies according to individual circumstances and is subject to change.
Stocks and Shares ISAs invest in Corporate bonds; stocks and shares and other assets that fluctuate in value.
Deposit Based Investment
Unlike a Building Society or Bank account your capital is not guaranteed.
The tax treatment is dependent on individual circumstances and may be subject to change in future.
There are various deposit-based investment vehicles available in the marketplace. Many customers will have money on deposit either with a bank or building society.
Every basic rate taxpayer in the UK now has a Personal Savings Allowance of £1,000. This means that the first £1,000 of savings interest earned in a year is tax-free. If you are a higher rate taxpayer (40%), then your allowance is £500, and 45% taxpayers have no savings allowance at all.
Commercial Banks & Building Societies
Commercial Banks and Building Societies offer a variety of savings accounts. Interest often varies in line with the general level of interest rates, though accounts which pay fixed interest over a specified period may also be available. Accounts with fixed interest may restrict access to the money on deposit, typically requiring notice before withdrawal, and charging penalties for early withdrawals.
With the introduction of the Personal Savings Allowance in April 2016, interest is now paid gross (before deductions for tax).
You can only make contributions to one cash ISA up to the limit of £20,000 each tax year (if you wished to change provider part way through the tax year you would have to transfer all the contributions made in that tax year to the new ISA in order to make contributions to the new ISA in that tax year).
Any individual with an ISA that has adopted the Flexible ISA rules introduced in 2015 can withdraw money from their flexible ISA and replace it in the same tax year without it using up any more of their annual ISA subscription limit for that year. Please check with your provider.
The cash ISA can consist of money on deposit enjoying a tax-free environment. The minimum age to own a cash only ISA is 16.
Cash Junior ISAs are now also available. Your child can have a Junior ISA if they:
- are under 18
- live in the UK
- don’t already own a Child Trust Fund (CTF)*
*From 6 April 2015 it became possible for parents to transfer their children's Child Trust Fund (CTF) account into a Junior ISA (JISA). This has to done before a child with a CTF can hold a Junior ISA instead.
At age 18 a JISA will automatically turn into an adult ISA.
National Savings & Investments
National Savings & Investments are Government backed. You can visit the NS&I website here http://www.nsandi.com/
The Financial Conduct Authority (FCA) does not regulate advice on deposits or national savings & investments products.
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