INVESTMENTS

Mini & Maxi ISA allowances and the new ISA rules.

In order to simplify the ISA Structure, the distinction between Mini & Maxi ISA's has disappeared. Nowadays there's only a distinction between a Cash ISA and a Stocks & Shares ISA. This means an ISA can now contain up to 2 different types of investment: - cash (including national savings plans) and stocks and shares.

ISA investment growth does not normally incur a tax liability. ISAs are flexible because they allow both lump sum investments as well as regular fixed contributions. In the UK ISA investments tend to be a very popular and tax efficient method of saving.

Both Cash ISAs and Stocks & Shares ISAs are open to anyone over 18, resident and ordinarily resident in the UK. Anyone over 16 can have a cash ISA.

Current ISA allowances & limits.

The new 2011/2012 cash ISA limit is £5340 and the limit for a Stocks & Shares ISA is £10680. You can invest up to £10680 into a stocks a shares ISA if you don't take the cash ISA allowance.

The overall combined ISA allowance is £10680 of which £5340 can be invested in a cash ISA . This leaves £5340 to be invested in a Stocks and Shares ISA if desired.

New ISA allowance for 2011/2012.

Following recent changes in government legislation, future ISA limits are now tied to the Retail Prices Index (RPI).

Future ISA allowances will be set by referring to the official RPI figures released each September with any increase applying to the ISA allowance for the following tax year. In the event of a negative RPI the ISA allowance for the following year will remain unchanged.

The RPI for September 2010 was 4.6% which means for 2011/2012 the overall ISA limit has increased by £480. The Cash ISA allowance has increased by £240.This means the Cash ISA limit for 2011/2012 has risen to £5340 and the overall ISA allowance has increased to £10680.