ISA Guide 2012
Isas are one of the best ways to save money and an established element of personal finance with around 15 million holders of cash Isas in the UK.
Well-liked for their unrestricted time frame, flexibility and simplicity, as well as the tax wrapper they offer, higher earners find them attractive because interest earned on savings, bonds or capital gains made on investments within an Isa are tax free.
You can choose to hold either stock market investments or a traditional savings account in an Isa. The system was set up in 1999 when the then chancellor Gordon Brown suggested it would help encourage people to save. However recently with record low Bank of England interest rates, savers have been receiving poor returns.
With higher-rate income tax, and pensions becoming less favourable for high earners, Isas are an appealing way to shelter your money from the tax man. However, there have been suggestions within government of removing this tax wrapper to try and make some extra revenue to fill the UK’s black economic hole.
This year we’ve covered how to maximize your Isa, the best way to extract income from your Isa holdings, be they bond funds, dividends or cash, the potential boost from exposure to other economies and how to diversify a small Isa pot, and the pros and cons of the multi-manager approach.
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