Comparing ISAs and ISA rule changes
In this, the final part of our guide, we look at the differences between cash ISAs and stocks and shares ISAs and provide you with a simple summary of ISA rule changes.
The differences between cash ISAs and stocks and shares ISAs
While both of these products allow you to invest money tax-free, they are otherwise very different - as the table below illustrates.
|
Cash ISA |
Stocks and shares ISA |
| Eligibility |
Must be 16+ |
Must be 18+ |
| Suitability |
Suitable for most savers |
Only suitable for those who accept that they may not get back the full amount they have invested |
| 2011/2012 allowance |
Up to £5,340 |
Up to £10,680 |
| 2012/2013 allowance |
Up to £5,640 |
Up to £11,280 |
| Risk |
No risk to capital – the value of the investment will stay the same or increase |
Always involves an element of risk – the value of the investment can down as well as up |
| Returns |
Limited returns |
Unlimited returns |
| Length of investment |
Good for both short and long term saving |
Suitable for long term investments of at least five years |
The type of ISA that's right for you will depend on your personal circumstances, what you wish to achieve from the investment and your overall attitude to risk.
Remember! If you're in any doubt you should consult an appropriate Financial Adviser.
ISA Rule Change Summary
6 April 2008:
- PEPs (Personal Equity Plans) become Stocks and Shares ISAs.
- Maxi ISAs and Mini Stocks and Shares ISAs became Stocks and Shares ISAs.
- Mini Cash ISAs and TOISAs (TESSA only ISAs) became Cash ISAs.
- You can transfer Cash ISAs to Stocks & Shares ISAs (but not vice versa).
- You can consolidate all your ISAs into one main Stocks & Shares ISAs.
6 October 2009:
The ISA allowance increases to £10,200 (with up to £5,100 in a cash ISA) for investors aged 50 or over on 5 April 2010. This means even investors aged 49 will qualify providing they turn 50 on or before 5 April 2010.
6 April 2010:
The ISA allowance increases to £10,200 (with up to £5,100 in a cash ISA) for all investors.
6 April 2011:
The ISA allowance increases to £10,680 (with up to £5,340 in a cash ISA) for all investors.
6 April 2012
The ISA allowance increases to £11,280 (with up to £5,640 in a cash ISA) for all investors.
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