What is an ISA?
An ISA or Individual Savings Account offers a tax efficient way to save money and invest. It is best to view an ISA as a tool to shelter your cash and investments from tax. No matter what rate of tax you pay, when you invest your money in an ISA, it is tax-efficient when compared to a normal investment account.
Each tax year the government sets an allowance that an individual is allowed to contribute to an ISA. All capital gains made and income received within the ISA are then tax free.
How much can I add?
The allowance for the 2019/20 tax year is £20,000. You can contribute up to this amount into either a Stocks & Shares ISA or a Cash ISA. It is possible to split the allowance between the two types of account; however, you are only allowed to open one of each in a tax year. Netwealth offers a Stocks & Shares ISA.
ISA allowances don't roll over to the next tax year if unused. Therefore, it is important to use as much of your allowance as is possible each year.
If you withdraw money from your ISA that part of your subscription is not added back on to your allowance and it is lost.
Who can qualify?
To qualify for a Stocks & Shares ISA allowance you must be a UK tax resident over the age of 18. Under 18s are eligible for a JISA (or Junior Stocks & Shares ISA).
How are my investments taxed within an ISA?
Any gains made by selling investments within your Stocks and Shares ISA are not subject to capital gains tax and equally any losses made on your investments in your Stocks and Shares ISA cannot be used to offset capital gains made on other investments held in a taxable account.
Investments that pay interest (e.g. government and corporate bonds), or rental income (such as some property funds) provide 100% tax-free income if held within an ISA and therefore offer tax benefits for everyone.
Income can also come in the form of dividend payments. The way these payments are taxed was changed for the start of the tax year 2016/17 and they are now 100% tax free when held within an ISA wrapper.
Having an ISA with Netwealth
All you need to open an ISA with Netwealth is: your full name and address, your National Insurance number and available cash in your bank account to make a payment via Debit Card or bank transfer.
If you have an existing ISA which is currently held on another platform you are able to transfer this across to Netwealth. Transferring your ISA