Stocks and Shares ISA"s Tax Free Savings
In a stocks and shares ISA you can invest £5,100 on top of the £5,100 that can be invested in a cash ISA for the tax year 2010/2011.
UK Government figures show 11.
9 million cash ISAs were opened in the 2009-2010 tax year compared with just over 3 million shares ISAs.
Returns though on shares ISAs according to Virgin money were almost 4 times higher as investors who put £5,100 into Cash ISAs during that tax year would have earnt £145, while a Stocks and Shares ISA with the same investment amount made returns of £593 before charges.
You can choose from a range of investments like individual company shares, investment trusts, exchange traded funds, unit trusts, open-ended investment companiesand government stocks like gilts provided they have at least five years to run when first acquired for the ISA.
For a higher rate tax payer who is risk adverse using the share isa for the purchase of gilts should give a better long term investment than leaving the money in a deposit account as the interest paid is tax free.
If you prefer a direct investment in the stock market and are looking to take a longer term view you can buy exchange traded tracker funds and there is no stamp duty (usually 0.
5%) on the purchase.
A FTSE 100 tracker for example will track the movements of the FTSE 100 as well as paying a dividend and reduce your risks as is invested in all 100 ftse 100 shares rather than just one.
The iShares FTSE 100 is an ETF that aims to track the performance of the FTSE 100 Index as closely as possible and is currently yielding 2.
23%.
The yield and capital gains are tax free while in the ISA wrapper but remember shares can go up and down so if the stock market drops you will find the capital of your investment lower.
Remember that if you have not used your ISA allowance by 05/04/2011 you will lose it as the allowance cannot be carried forward.
UK Government figures show 11.
9 million cash ISAs were opened in the 2009-2010 tax year compared with just over 3 million shares ISAs.
Returns though on shares ISAs according to Virgin money were almost 4 times higher as investors who put £5,100 into Cash ISAs during that tax year would have earnt £145, while a Stocks and Shares ISA with the same investment amount made returns of £593 before charges.
You can choose from a range of investments like individual company shares, investment trusts, exchange traded funds, unit trusts, open-ended investment companiesand government stocks like gilts provided they have at least five years to run when first acquired for the ISA.
For a higher rate tax payer who is risk adverse using the share isa for the purchase of gilts should give a better long term investment than leaving the money in a deposit account as the interest paid is tax free.
If you prefer a direct investment in the stock market and are looking to take a longer term view you can buy exchange traded tracker funds and there is no stamp duty (usually 0.
5%) on the purchase.
A FTSE 100 tracker for example will track the movements of the FTSE 100 as well as paying a dividend and reduce your risks as is invested in all 100 ftse 100 shares rather than just one.
The iShares FTSE 100 is an ETF that aims to track the performance of the FTSE 100 Index as closely as possible and is currently yielding 2.
23%.
The yield and capital gains are tax free while in the ISA wrapper but remember shares can go up and down so if the stock market drops you will find the capital of your investment lower.
Remember that if you have not used your ISA allowance by 05/04/2011 you will lose it as the allowance cannot be carried forward.
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