Shares and cash: what are your ISA investment limits?

In a turbulent economic climate, it can still make a lot of sense to consider an ISA investment. Limits have been raised recently, so it is best to check how much you can put away in one of these tax-free schemes.

Visit the money, tax and benefits page at www.direct.gov.uk for regulations relating to ISA investments. These can be in the form of a cash ISA, where the interest will be tax-free, or a shares and funds ISA, where any capital growth will be tax-free and there is no further tax to pay on any dividends.

The overall limit on your ISA investments for the tax year of 2011-12 is £10,680,of which up to £5,340 can be put into a cash ISA. These limits will rise each tax year based on the Retail Prices Index.

You do not have to invest all your ISA funds in one go. With a Cash ISA account, you can add in a little each month. Your bank or building society will keep track of how much of your annual ISA allowance remains, before the new tax year begins in April.

Limits only apply to new investments. For example, if you have money saved from a previous tax year, you can transfer some or all of that money from your cash ISA to a stocks and shares ISA without this affecting your annual ISA investment allowance.

Similarly transferring an existing ISA account from one bank or building society to another (perhaps to take advantage of preferential interest rates) will not affect your annual ISA investment limits.

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