ISAs

An individual savings account (ISA) is a tax-efficient way to save, with no tax liability when the proceeds are withdrawn. In addition your investment is free of capital gains tax and there is no liability for tax on any income taken from the fund.

An ISA is not an investment in itself but a ‘wrapper’ to shield an investment from tax – whether it is cash, bonds or equities. The tax breaks are on exit, not entry, so the investments are made using taxed income, but the proceeds on withdrawal are tax free. Be aware however, that ISAs are not entirely tax free as tax is paid on dividends received within the fund.