Tax Information Savings and Investments

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Individual Savings Accounts (ISAs)

Maximum investment 2003/04:: Ł7,000

Notes

Investment in a "maxi ISA" is subject to an overall limit of Ł7,000 in 2003/04. Of this, up to Ł3,000 can be in cash (National Savings, etc) and up to Ł1,000 can be in life insurance. The balance, up to the overall limit, can be invested in stocks and shares. Thus, for example, Ł500 could be invested in National Savings, Ł250 in life insurance, and the balance - up to Ł6,250 - could be invested in stocks and shares.
Investment in up to three "mini ISAs" is also subject to the Ł7,000 limit, but the amount which can be invested in each mini ISA is capped - Ł3,000 for cash, Ł1,000 for life insurance and Ł3,000 in stocks and shares.
Investments in ISAs are completely tax free and, in addition, benefit from the payment of a 10% tax credit on UK dividend income until 5 April 2004.
Those aged 16-17 can invest up to Ł3,000 only, either in the cash element of a maxi-ISA or in a cash mini-ISA.

Personal Equity Plans and TESSAs

Although PEPs and TESSAs are no longer available, sums already invested (and continuing investments in TESSAs to maturity) continue to score for tax breaks.

Tax breaks for PEP holdings are as for ISA investments.

Investment in TESSAs can continue to maturity, when the accrued interest will be free of tax.

The capital received on the maturity of a TESSA can be invested into an ISA without affecting the annual ISA investment limits.

All TESSAs will have matured by 5 April 2004.

Tax Exempt Special Savings Accounts (TESSAs) Investment limit

Maximum re-investment on maturity (into an ISA): Ł9,000 original capital

Did you know?

That the cost to the Government of ISAs and PEPs in 2002/03 is estimated at:

ISAs: Ł825 million
PEPs: Ł575 million