Increase in ISA limits - October 2009

With interest rates so low, the outlook hasn’t been particularly encouraging for investors. However, this April’s somewhat bleak Budget did offer some hints of a silver lining. As of 6th October 2009, the investment limit for ISA’s has risen from £7,200 to £10,200 (£5,100 may be in cash). This only applies if you were born before 6th April 1960, although you can invest the extra at the age of 49, as long as you reach 50 by the end of the current tax year. The age restriction will be lifted from April 2010 and this new higher limit will apply for all eligible investors.

Why bother with ISAs?

With the tax burden rising every year and likely to rise even more quickly from now, it is vitally important you structure your investments in the most tax-efficient way – and ISAs are one of the most tax-efficient investment options available to you. In addition, after a turbulent start to the year, investment markets have been rallying of late and investing through an ISA is a great way to take advantage of this without having to worry about paying tax on any gains.

• There is nothing to put on your tax return.
• There is no UK tax on dividends within a stocks and shares ISA, but tax credits cannot be reclaimed.
• Interest is received UK tax free, except for cash temporarily held in a stocks and shares ISA.  
• You won’t pay any capital gains tax on profits.