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Don’t pay more tax than you have to… make use of your ISA allowance 
It is very rare that the Government provides something which shelters your money from tax – but an Individual Savings Account (ISA) is one of those things. Introduced in 1999, it has now become the primary savings vehicle, with more than 17 million people – about 1 in every three adults – now owning one (source: www.hm-treasury.gov.uk).

There are just two types of ISA - the Cash ISA and the Stocks and Shares ISA – and the combined allowance for both in 2010/11 is £10,200.

Within this, the limit for Cash ISAs - or for the cash element within a Stocks and Shares ISA – is £5,100. However, there is flexibility over how these limits can be used - you can, for example, put the maximum £5,100 in a cash account and £5,100 in a stocks and shares account. Alternatively, though, if you place just £2,000 in cash, you can use the entire remaining balance – £8,200 in this case - to invest in stocks and shares. If you don’t need cash at all, you can put the full £10,200 into stocks and shares.

In addition, you can transfer existing Cash ISA holdings to a Stocks and Shares ISA without impacting on your current tax year allowance. So, if you have £10,000 already sitting in existing cash ISA plans then this amount can be moved to a Stocks and Shares ISA, yet leave your entire current tax year allowance still available for new investment.

Once invested, you have no further liability for income or capital gains tax on any profits you receive. There are also thousands of different investment options available – from cash and bonds through to property, equities and even overseas companies – so you can be confident that, whatever your aims and objectives, there is a suitable home for your money.

You should always seek advice when investing in a Stocks and Shares ISA in order to ensure that the investments you choose match the amount of risk you are willing to take.

If you would like us to send you a guide which takes you through the basic principles of ISAs and the different savings options and tax benefits please contact us.

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