The ISA advantage
by admin on 01/12/09 at 5:13 pm
Though the ISA attraction has ebbed somewhat due to the withdrawal of tax benefits on the dividends accruing on pension funds, there are other benefits that we can still enjoy by investing in ISAs. It is of course up to the individual to compare ISA rates offered by different companies, and select the one that gives him the best ISA rates.
The advantages are as under:
a) It is not necessary to declare income earned through the ISA route.
b) There is no capital gains tax levied on ISA income.
c) If the ISA investment is in bonds rather than shares, then it is possible to reclaim the 20% tax benefit.
d) Unlike the loss you would incur by way of extra taxes for every increase in the personal income, ISA income by virtue of being non-declarable does not get added to your total income and you will not need to pay anything extra by way of tax.
e) Under the overall cap of £7000, it is possible to invest in seven different funds with an investment of £1000 each so that you get the advantage of a greater spread of risk.
All is thus not lost and you can definitely look for funds that give the best ISA interest rates and invest in them.
