For many individuals ISAs constitute a tax efficient investment instrument which is core to their saving strategy.
ISAs allow higher rate tax payers to receive significant income tax savings.
Investing in ISAs can mean you avoid having to pay 22.5% on the gross dividends paid on any shares held within the ISA.
For basic rate tax payers although there is no longer any income tax savings on dividends there remains the capital gains tax exemption. If you were to contribute consistently to your ISA, it is possible that you could develop a sizeable tax free portfolio over time.
ISA income does not need to be documented on a tax return and for most people it makes for sound practice to keep contributing.
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.
Although there is no tax relief on contributions into ISAs, any funds ultimately withdrawn are free of tax.
To illustrate the potential of ISA saving, a husband and wife could shelter up to £28,000 between them from the tax man by contributing across 2 tax years; for example by subscribing on the 5th April and then again on the 6th April.
Funds do not need to be invested immediately and one can wait for a sensible time to invest. The ISA is highly flexible in this regard and there is a very large universe of possible investments.
At Simple Investments we can advise on shares which might be suitable for inclusion within your ISA in line with your objectives.
UK Base rates were cut by 25 basis points to 5.25 % as widely predicted. The Forex boys had a 50 basis point cut on their minds (from what I hear) and that may well have helped fuel the downside on the index that followed. The BOE seem to be a conservative bunch, perhaps completely predictable. It is a toss up at the moment between averting recession...