No Tax on gains

All growth on investments held within an ISA is tax-free. You do not have to pay Capital Gains Tax (CGT).

No Tax on income

When you receive income from an ISA there is no additional tax to pay. This means that you can enjoy interest payments from cash and corporate bonds tax-free. Higher rate taxpayers avoid paying a further 22.5% tax on the net dividends received. Please note that the 10% tax credit on UK equity dividends is no longer reclaimable within an ISA.

Following reforms to the ISA regulations in April 2008, ISAs have been simplified and there are now just two components; Stocks and Shares and Cash.

The cash component allows individuals to invest in Building Society deposits, UK and European authorised Bank deposits, cash unit trusts or National Savings. This is a good choice for short-term savings especially if individuals want to access their money easily. You can invest up to £3,600 into a Cash ISA.

The remainder of the £7,200 can be invested in a Stocks & Shares ISA with either the same or another provider. The Stocks & Shares component allows individuals to invest in shares listed on a recognised stock exchange, including collective investment schemes. For the Stocks & Shares component, Bestinvest, recommend that the core investments of most portfolios should be unit trusts/OEICs and investment trusts. This type of ISA is suitable for individuals who are able to leave their money alone for a long period of time and are comfortable taking on the risk of market fluctuations in the value of their investments.