What are ISAs?

For many individuals ISAs constitute a tax efficient investment instrument that’s key to their saving strategy.

What the tax savings mean to you

Growth in your ISA is free of capital gains tax and there is no further income tax to pay on any income received. ISAs therefore allow higher rate tax payers to receive significant income tax savings and avoid having to pay 22.5% on the gross dividends paid on any shares held within the ISA.

If you were to contribute consistently to your ISA, it is possible that you could develop a sizeable tax free portfolio over time.

Other benefits

ISA income does not need to be documented on a tax return and for most people it makes sense to keep contributing. Funds, however, do not need to be invested immediately and you can wait for a sensible time to invest. ISAs subsequent offer flexibility and there is a very large universe of possible investments.

As a result some investors have built up sizeable tax free funds since their introduction in 1999 and many view their ISAs as part of the potential or current pension arrangements.

An example

To illustrate the potential of ISA saving, a husband and wife could shelter over £42,000 between them from the tax man by contributing across 2 tax years; for example by subscribing on the 5th April 2012 and then again on the 6th April 2012.

At Simple Investments we can advise on shares which might be suitable for inclusion within your ISA - in line with your objectives.

Interested? Give Barry Fudge a call on 01483 413500 or email him on barry@simple-investments.co.uk