7th October 2009
A Brief Account of the Latest Announcement from the UK about ISA Savings and the Implications for the Finance Sector in Britain
For investors who are considering how to start on the savings road, the
statement from the UK’s Chancellor that the annual Individual Savings Account (ISA) allowance is to be raised from its present level of seven thousand two hundred pounds to ten thousand two hundred pounds is particularly welcome indeed and may well persuade a lot of prospective investors to create an ISA as the first step in commencing to save for the future.
This big increase in the maximum limit that people are able to invest annually is a strong sign that the Government of the UK wants everybody to save using this means of investment.
For those not familiar with ISA’s (Individual Savings Accounts), a short summary may be helpful. ISA’s are now over ten years old and even before the news from the Chancellor they had been thought of by many as a stable and safe type of tax free saving.
No income tax is payable if you invest in an ISA. Add to that the fact that no capital gains are payable on an ISA and the perks of this form of saving become even more attractive.
Any taxpayer.A taxpayer who is over the age of sixteen can begin an isa savings account and they can do so with as low an investment as ten pounds. This highlights a important point in the Governments thinking
behind the creation of ISA’s – they are intended to encourage more people who have never saved before to start making provision for the future.
Another important point for ISA’s is their flexibility. You can decide for yourself how you wish to invest. There are different ways that are available when investing in an ISA ranging from cash ISA’s to stocks and shares ISA’s. You simply opt for the one that you consider to be right for you.
Most people see investing in a cash ISA as a more secure type of investment since the returns are likely to be fixed and should be reliable. On the other hand stocks and shares ISA’s are considered likely to yield more but the downside is that a much higher
element of risk attaches to this form of investment.
The situation now is that the maximum amount that you can invest into a mix of ISA investments is ten thousand and two hundred pounds and the maximum that may be invested into a cash ISA is five thousand one hundred pounds. For savers whether new to investing or not, ISA’s are an increasingly attractive and versatile type of saving and should not be overlooked when choosing how to invest.
