Investment ISA Explained

An investment ISA lets you put your money in to a range of different investments, including open-ended investment companies, corporate and government bonds and much more. You also have the option to purchase individual shares and place those in to an ISA if you want too. This is called a stocks and shares ISA and you are allowed to invest up to £10,000 annually in this type of ISA.

A cash ISA is when you put a certain amount of money in to a bank account with relatively high interest and leave it there for a set period of time. A cash ISA is completely tax-free. An investment ISA is not tax-free,although if you invest in certain shares and stocks you will pay a lower amount of tax. You will also have to account for certain charges when taking out an investment ISA. These charges usually cover use of a financial manager and advisor as well as a variety of admin charges.

Every adult in the UK is allowed to invest £10,600 every tax year. You can choose to invest half or all if this in an investment ISA depending on what sort of advice you have chosen to take. Many people invest half in a cash ISA to take advantage of the tax-free interest. The other half they put in to an investment ISA, which may be a variety of stocks and shares.

If you are receiving a high income from your employment and you are currently, paying tax in the higher tax band you may be entitled to some tax relief with your investment ISA. This is why it pays to get advice from a reputable stocks and shares advisor.

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