ISAs

ISAs - 16 December 2008

Investment maximums for ISAs are as follows:

Individual Savings Accounts (ISAs)	Up to 50	50 and over (note 1)
Overall investment limit	£7,200	£10,200
Including cash maximum of	£3,600	£5,100

This enhanced limit for those 50 and over applies for 2008/09 and from 6 October 2009.
Stakeholder cash and medium term products can be held in your ISA.
Investments in ISAs are free of income tax and capital gains.
Those aged 16-17 can invest up to £3,600 only.
ISAs allow you to take your money out at any time without losing tax relief and furthermore you are not required to declare income and capital gains from ISA savings.
The income tax credit is restricted to 20%. Capital gains tax deferral relief is also available.
From 16 December 2008, ISA investments may now include bonds which are issued by Multilateral Institutions.

From 6 April 2010, the ISA limit will increase to £10,200, up to £5,100 can be saved in cash for all ISA investors.

An HMRC survey* of 1250 individuals concluded that:

One third of ISA holders had been encouraged to save by the existence of tax-free ISAs and approximately one quarter cited tax incentives as the principle reason for saving.
40% of ISA holders have saved £8,000 or more in their ISA account.
Mini cash ISAs were the most popular form of ISA
53% of ISA holders fund their ISAs from their income, while 28% fund their ISA by a transfer from taxable savings and 16% transferred funds from non-taxable savings.
14% reported that inheritances and gifts were the primary source of their ISA investments.
60% have never made a withdrawal from their ISA while 10% of ISA holders had made four or more withdrawals