Your questions answered
Q: Can I invest the full £10,200 in cash?
A: No. Although ISA limits have been extended there are still separate limits for cash ISAs and stocks and shares ISAs. The maximum that can be invested in a cash ISA is £5,100, up from the current limit of £3,600. If you are under 50 you will be able to take advantage of this raised limit from next April.
Q: I am over 50, if I take out a cash ISA, can I also invest in a stocks and shares ISA?
A: The limits may have changed but the principle behind ISAs remain the same. From October 5, if you invest the maximum in a cash ISA (£5,100) you can now also invest the rest of your allowance (£5,100) in a stocks and shares ISA.
Q: I am over 50, but I’ve already taken out an ISA this year. Will I be able to top up my ISA?
A: If you already have £3,600 in a cash ISA, you should be able to pay a further £1,500 into it. If you don’t already have a stocks and shares ISA, you could also invest £5,100 on or before April 5 next year. (Or alternatively you could put £6,600 into stocks and shares if you don’t “top up” the cash ISA.) If you have invested the full £7,200 in stocks and shares you will be able to put a further £3,000 into this account – or put this money into a cash ISA instead.
Q: I’ve always just had cash ISAs. Should I think about a stocks and shares ISA now to take advantage of the new limits?
A: Whether you are investing in a bank account, shares, bonds or property it makes sense to do it in the most tax-efficient way possible. However, the tax treatment should not dictate where you invest your money.
The value of investments and the income from them can go down as well as up and you may not get back your original investment. Past performance is not an indication of future performance. Tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent finance acts.