INVESTMENT MATTERS
ISA Has Become Nicer
Most know about the tax
benefits of an ISA, those being:
• Tax freedom on capital gains;
and
• Generally tax-free
investment income
his tax efficiency means that, all other things
being equal, there is more scope for
investment returns, given that investment
growth can accrue unreduced by taxation.
Indeed, for the higher rate (40%) taxpayer and
additional rate (45%) taxpayer, an ISA is almost
essential as part of the investor’s investment
strategy.
The price you pay for the tax freedom of an ISA
is the restriction on the amount of contributions
that can be paid. So, for example, in 2014/15 the
maximum total contribution is £11,880 of which
up to £5,940 can be paid into a cash ISA with the
balance available for a stocks and shares ISA. This
ISA allowance cannot be carried forward – you
either use it or lose it.
Whilst a cash ISA is clearly attractive for a saver
who need