Individual Savings Accounts (ISAs)

Individual Savings Accounts are wrappers that protect your investments from the taxman.

Objective
To provide individuals with an account that offers tax advantages into which they contribute savings that may be used for retirement.

Suitability
ISAs are suitable for investors who are able to set aside savings for retirement, school fees etc.

Features

• Tax efficiency: The proceeds of ISAs are free of Personal Income Tax and Capital Gains Tax. Moreover, the investments inside grow free of Capital Gains Tax. You do not even have to put ISAs on your tax return. Some underlying investments may be subject to a small amount of irrecoverable tax. ISAs attract a 20% tax credit on interest distributions (eg from corporate bond investments). The 10% tax credit on dividend income (eg from equity investments) cannot now be reclaimed.
• Flexibility: ISAs can hold a wide range of high quality, long-term investments such as mutual funds, shares, loans to companies, gilts (government borrowing) and cash. As ISAs are wrappers, you need to remember that investments you have chosen within the accounts can go down as well as up in value and should be viewed for the long term.
• Access to your money: There are no time limits for keeping ISAs. You can access your money at any time, although once outside the ISA wrapper the money will no longer attract tax benefits.
• Contributions: Depending on the type of ISA, you can invest a maximum of £7,200 in each tax year.
• Charges: ISAs can carry administration charges, which vary according to what you choose to invest in. Contact your local financial adviser to discuss charges.
• Pensions and ISAs: Taken separately, pension plans and ISAs are excellent long-term investments, offering tax-efficiency and flexibility. The two together are complementary and can be a highly effective way of planning for your future. The pension plan provides an investment that is in a favourable tax environment until you take the income and the ISA provides an investment vehicle, which is in a favourable tax environment once the money is invested and when you take the income.

The Edward Jones ISA does not meet CAT standards. 'Tax free' means in the hands of the investor. Tax law and practice is subject to change. The value of tax benefits to you depends on your personal circumstances.

For guidance on the best ISAs for your needs, please contact your Edward Jones financial adviser.