ISA's Page Five

TESSAs

After April 5th 1999 investors were also unable to take out a new Tax Exempt Special Savings Account. However, you can continue to pay into an existing TESSA for the full five years. Many ISA managers offer TESSA-only Cash ISAs for investors who want to move their maturing TESSA money into an ISA (only the original investment).
The investment limits for TESSAs taken out before 6th April 1999 remained at £9,000 over the five year term.

What are the tax advantages of an ISA?

Your ISA will benefit from tax-free growth, free of all income tax and capital gains tax. UK shares within the Investment element will benefit from a 10% tax credit on any dividends paid until 5th April 2004. After that date the tax credit will be nil.

Can I 'dip into' my ISA if I'm short of cash?

There is no lock-in period for ISAs and withdrawals are possible at any time, without loss of tax relief. This may not be the case if you choose to save in an ISA that in return for offering extra benefits - such as a guarantee - may offer you less flexibility.
Remember that the investment and the life assurance ISA elements should be viewed as a medium to long term commitment (5 years+) and the value of investments and any income from them may fall as well as rise and investors may get back less than they originally invested. Past performance is no guarantee of future performance.

Could the ISA bubble burst?

The Government has announced that there will be a review of ISAs once they have been in force for 7 years. This gives the Government and ISA providers time to consider the way forward for future years of investment and savings in the UK. We do know, however, that ISAs will exist offering tax benefits and growth potential until at least April 2009.

Some of the products and services offered by IFAs may not be regulated by the FSA. The value of investments can go down as well as up. Past performance is no guarantee of future performance.

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