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For the tax year 2011/2012 the ISA (individual savings accounts) limit will be rising
by £480 to £10,680 as the annual ISA limit is now linked to RPI.
The savings limit for 2010/11 was set at £10,200.
Those
that want to use an ISA will be able to save up to the £10,680 limit. Of this, up to £5,340 can be saved in a
cash ISA with one provider alternatively all of your allowance or the remainder can be saved in an investment ISA which can
include for example shares, ETF’s, unit trusts and investment trusts.
Bear in mind that the value of tax relief depends on individual circumstances and tax rates are subject to change
and if you don't pay tax, you will not benefit from any tax relief (although you might in the future). Annual limits are
also subject to review and the Government's favourable tax treatment of ISAs may not be maintained.
All income and capital gains from your Isa are not currently included in your personal tax liability
meaning that you don't pay any tax on any interest, dividends or bonuses you make from your Isa making them an excellent
way of reducing your tax bill as a 40% taxpayer would normally lose 40% of all interest earn’t in tax and you do not
have to include your ISA on a tax return either helping to reduce your administration.
If you have a stocks and shares Isa and the capital increases in value, you will not have to pay Capital Gains Tax
(CGT) on the increase either.
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