A brief Look at the Investment ISA

For a long time, people with some cash to spare have searched for good investing opportunities. The goal has been to find good plans that offer maximum returns and minimal risk. The search has led to several opportunities in the financial and money market, some of which include commodities, stocks, shares, futures, options and forex to name but a few. Currently, one of the popular schemes is investment ISA. Read on to gain more insight on this mode of investing and to decide whether it’s for you.

What is an investment ISA?

An Individual Savings Account (ISA) investment is at times referred to as Stock and Shares ISA. It is a retail investment plan that is offered to those living in the UK. The account allows an individual to invest in qualifying investments (Stocks and Shares). It was first launched into the market on 6th April 1999 and was known as Personal Equity Plan (PEP). Later on in 2014, it was modified and became known as the “New investment ISA.” Any person can invest in different ISA’s and they are allowed to keep any profit up to a certain amount (check depending on which financial year you’re investing in) without being charged tax. It is viewed as an alternative to a Cash ISA since it is a tax-free saving account.

How Does It Work?

The goal of the investment is to allow UK residents to invest in stocks and shares (also known as qualifying assets). An investor qualifies for favourable tax status with an ISA, which means no capital gains tax or income tax is charged on the account. Any money that is withdrawn from the plan is exempt from tax. An investor can invest in varied assets including cash, open-ended investment firms (companies, unit trusts and stock market. Public debt securities, which include corporate bonds, government bonds, Eurobonds, commercial paper, and debentures also qualify. Warrants, shares of unquoted companies, options, and futures may also qualify.

What Are The Benefits?

Although it was established many years ago, this mode of investing and saving has become quite popular lately. This is pegged on its many benefits, which are as follows:

Tax-free

Capital tax or income tax is not charged on the gains or income from the investment.

Versatile

There are many qualifying assets that an investment can choose from. Also, there are many financial institutions that offer the services.

Returns

Compared to other related investment schemes, investment ISA has better and more stable gains or returns.

User-friendly

An investor doesn’t need to have deep knowledge of investments in the plan. Also, since it is tax exempt, a person doesn’t have to report the income, capital gain, or interest to the HMRC.

Increased limit

The limit allowed on ISA accounts is reviewed every year and currently it is set to £20,000 per year. 

Transfer

You can transfer your investment ISA into a cash ISA but only when the tax year has ended. Never just withdraw money from your ISA account.

Comparing Investment ISAs in the UK

When investing in stocks and shares ISA, a customer needs to aim at getting the best savings allowance that is free of tax. Notable providers include the following:

AXA Self Investor - A person can invest from £500 or £50monthly in over 1,250 funds under the FSCS protection scheme.

Sun Life - 1 FSCS Protection Scheme operates in which an investor can invest from as low as £100 yearly or £10/month. It follows the FSCS Protection Scheme.

Hargreaves Lansdown -A person can invest from £100 or £25monthly in most funds. It is a FSCS Protection Scheme and share dealing per trade start from £5.95 up to 11.95.

Interactive Investor ISA - Any amount can be invested in over 4,000 FSCS Protection Schemes. A £20 fee is charged quarterly.

Other Firms include; True Potential Investments, TD Direct Investing, Trustnet Direct ISA, The Share Centre, Virgin Stocks & Shares ISA and many others.

You may want to read about: Cash ISAs