Individual Savings Accounts (ISAs)

Maximum investment 2002/03: £7,000

Notes

Investment in a "maxi ISA" is subject to an overall limit of £7,000 in 2002/03. Of this, up to £3,000 can be in cash (National Savings, etc) and up to £1,000 can be in life insurance. The balance, up to the overall limit, can be invested in stocks and shares. Thus, for example, £500 could be invested in National Savings, £250 in life insurance, and the balance - up to £6,250 - could be invested in stocks and shares.

Investment in up to three "mini ISAs" is also subject to the £7,000 limit, but the amount which can be invested in each mini ISA is capped - £3,000 for cash, £1,000 for life insurance and £3,000 in stocks and shares.

Investments in ISAs are completely tax free and, in addition, benefit from the payment of a 10% tax credit on UK dividend income until 5 April 2004.

Personal Equity Plans and TESSAs

Although PEPs and TESSAs are no longer available, sums already invested (and continuing investments in TESSAs to maturity) continue to score for tax breaks.
Tax breaks for PEP holdings are as for ISA investments.

Investment in TESSAs can continue to maturity, when the accrued interest will be free of tax.

The capital received on the maturity of a TESSA can be invested into an ISA without affecting the annual ISA investment limits.

Tax Exempt Special Savings Accounts (TESSAs) Investment limits
Maximum first year deposit
£3,000

Maximum in years 2 to 4
£1,800

Maximum in year 5
£600 - £1,800

Maximum over five years
£9,000

Maximum re-investment on maturity (into an ISA)
£9,000 original capital