In Five Minutes, You’ll Know Everything You Need about ISAs

shares of stock in companies. It may sound too good to be true, but it is in fact the reality. But, as they say, you often can’t get everything you want and in the case of an ISA account, that is certainly true.

The Basic Limitations

As you might expect, the government does not let you get away with too much of a good thing. In the case of ISAs, there are limitations as to how much cash or stock you can place in your account each tax year. This makes perfect sense: since the interest on the cash, and the capital gains on the value of the stocks is tax-free, the government would go broke overnight if there were no limits. So, as a result, the following rules are currently in place. You can have only a total of £11,280 in your ISA during any particular tax year. You have to understand that this cannot all be cash. The limit on the cash portion of any ISA is £5,640. It is also worth noting that, if for any reason you should withdraw any of your cash from your ISA during a particular tax year, you cannot put even 1 pound of it back in during the same tax year. Therefore, if you withdraw £1,000 at the beginning of the tax year, you are going to have to wait until the beginning of the following tax year to replenish your ISA.

Enjoying the Advantages

Granted, the limitations on placing cash in an ISA during any given tax year won’t make you a millionaire overnight. But, given the fact that most basic rate taxpayers can expect to pay 20% on the interest earned in a traditional savings account and those in the higher income brackets 40%, the ability to pay 0% is awfully appealing. Also, don’t forget that you can contribute to your cash ISA every year, up to the current maximum. If you make it a habit, and start out at an early age, the multiplier effect of the interest earned, coupled with the tax savings, will provide for a very nice nest egg in the future.

Get Started Now

If you have not already set up your own cash ISA, what are you waiting for? The tax advantages alone should be enough to compel you into action. You can also easily get the best cash ISA, where your tax benefits are guaranteed by law and where you can get a very compelling interest rate on your money. It’s always a good idea to take advantage of a free deal!