26 Feb 2015

A question about : Few questions about ISA...

I realise now that it is good to have an ISA and simply build it up every year. I'm not currently a tax payer and probably won't be for another 3 years at least.

From a brief search online it appears the Abbey Postal ISA is currently highest for cash at 5.1%

What about a Maxi ISA though? My thinking is that I could stick Ј3k into cash as normal, and use some (if not all) of the Ј3k stocks allowance for some shares/funds/etc.

How would this work? Getting a cash ISA seems easy enough, but the stocks/shares part, where do I go? Do I need to look for bank that offers this maxi combination specifically? or what? Huh

Any advice would be appricated.

Best answers:

  • ISA's are tax devices. If you're never going to be paying tax then you need to ignore if an account or investment is 'ISAable' or not and just look for the APR.
    You can get share/fund isas from all sorts of places - go to the www.fool.co.uk and read up on the FAQs.
  • Thanks for your reply.
    I will be paying tax in about 3 years or so. Therefore, if I start with ISA now with Ј3k every year into each cash and stocks, by the time I'll be paying tax I'll have Ј9k in cash and Ј9k in stocks (assuming the value of these don't fall).
    Have I got that bit correct?
  • But if you are going to be paying tax in the future, you're best off going for an ISA now. That way you lock as much money away from the tax man as possible (before they get rid of ISAs).
    MAXI ISA would depend on your attitude to risk - generally the rates paid on cash elements within a maxi ISA are not worth having. The providers encourage you to put as much of the investment as possible into stocks & shares - you could get a much higher return than 5.1%, you could get lower.
    Alternatively you can have a cash mini ISA (Abbey is the highest payer at the moment) plus a stocks & shares ISA, plus an insurance ISA. Many of the providers of stocks & shares ISAs offer both mini and maxi varieties. If you're interested, it might be worth going to a fund supermarket (such as Hargeaves Lansdown) who provide the ISA wrapper and let you choose funds from multiple fund managers. I've no idea about which is the best wrapper, or which are the best funds to choose though!
  • Do we have any idea of when ISAs might finish ???
  • ISAs started in 1999 and the Inland revenue states that they will be around for at least 10 years - their tax free status may then change (some tax benefits on stocks and shares ISAs have already been reduced). From the 2006/7 tax year the total amount you can invest each year will be reduced from Ј7000 to Ј5000 (I think this may involve a drop from Ј3000 to Ј1000 for mini cash ISAs).
    Full info is available on the Inland Revenue website: https://www.inlandrevenue.gov.uk/pdfs/ir2008.htm
  • Thank you, SL and saver smurf .
    Yes, hopefully the ISA limits will be reviewed again and become Ј7k and Ј3k, as they are now.
    Leia
  • Excellent!
    Thanks you guys for the information. The seperate providers bit for each type (cash and stocks) is exactly what I'm after.
    I'm going to apply for the Abbey Postal ISA now. Then maybe look at Egg fund manager centre first for the stocks ISA (I have the savings there so it's all ready basically).
    Thanks all again.
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