Before you make any lump sum investment, we recommend you have 2 or 3 months worth of salary in your building society or bank to cover unforeseen circumstances.

If you know what you need and have a lump sum to invest, you can choose from our specially selected:

An Individual Savings Account (ISA) is a tax-free wrapper through which your investment enjoys

*Tax-free growth

* Tax-free returns

What is an ISA?

ISA stands for Individual Savings Account. These were introduced on the 6th April 1999. At that time the Government promised that ISAs would available for at least 10 years. ISAs are designed to encourage savings and allow you to invest from as little as £10 up to a Maximum of £7,200 each tax year until 5th April 2010. From the 6th April 2010 the maximum is £10, 200.

None of the investments held within ISAs are subject to taxation. This means you can keep any money you earn from your investment without having to pay tax on any gains made.

This is different to investments, such as ordinary bank or building society accounts. Normally tax is deducted taken from any interest before it is added to deposit accounts.

(Please note: there are special rules for people that do not pay Income Tax and choose to save or invest in Bank / Building Society accounts. Your financial adviser will be able to explain these rules).

Who can have an ISA plan?

There are certain rules regarding as to who can have an ISA plan. Since ISAs were first introduced there have been restrictions as to who can subscribe to a plan.

In order to make a contribution to an ISA plan you must be UK tax resident (or perhaps a Crown Employee that are serving overseas).

In addition to this there are age limits:
Anyone aged 16 or over may invest up to £3,600 into a cash ISA. The plan may be a Cash Mini ISA or the cash component of a Maxi ISA. From the 6th April 2010 maximum investment is £5100.

People over the age of 18 may elect to invest their money in a Stocks & shares ISA.

If you have any queries about your eligibility for an ISA contact us now.

What are the different types of ISA?

ISAs come in two different versions so that they can cater for the different needs of investors. It is possible to have a mixture of the different types but before you do this you should refer to our section on what are mini and Maxi Isa 's? (below) and Stock and Shares ISA - These allow you to invest in either Company Shares quoted on a recognised Stock Exchange, investment trusts, unit trusts or OEICs. You can, if you wish, mix and match the investments. Cash ISA - These allow you to invest in a deposit account with a bank or building society. Life Insurance ISA - These allow you to purchase a Life Insurance savings plan or lump sum investment plan.

Why would I want an ISA?

ISAs are an excellent way to save. Not only is any growth in the value of an ISA tax-free but also you may have access to your money whenever you like. You do not even have to tell your Tax Office that you have an ISA.

How much can I invest in an ISA?

Under current rules you can invest during any single tax year up to a total of £7,200 into a single Stocks and Shares Maxi ISA or spread amongst up to two Mini ISAs (a tax year runs from 6th April to the following 5th April). These limits will remain in force until 5th April 2010. The maximum will increase to £10,200 from the 6th April 2010.

Cash ISA - Amounts up to a Maximum of £3,600 can be paid into a Cash ISA in any single tax year. From 6th April 2010 maximum will be £5100.

What are Maxi and Mini ISAs?

In addition to the two components mentioned above, there are also two different versions of an ISA. These are known as Maxi and Mini ISAs. You must always establish which version of an ISA that you are contributing to when you first start a plan, as this may affect the amount you can invest in the future.

During each tax year you may invest in one ISA or you may decide to spread your money across MINI ISAs, where you can have a Maximum of three. Whether or not you have more than one version of an ISA; the annual investment limit remains the same at £7,200 for the current tax year.

Maxi ISA Any provider that wishes to offer a Maxi ISA must include the opportunity for you to invest in stocks and shares (including unit trusts, OEICs and investment trusts). You are allowed to invest your total annual ISA allowance in a Stocks & Shares Maxi ISA. The ISA provider can elect to offer Cash and Life Insurance components alongside the Stocks & Shares component if they wish. The overall investment limit into a Maxi ISA equals £7,200 for each of the tax years until 5th April 2010..

Mini ISA - Each Mini ISA may only contain a single component of the allowable investments. If you wish to spread your investment amongst two or more different types of ISA plan then you must establish Mini ISAs. Each of the plans could be with a different provider. You may subscribe to separate Mini ISA for each investment component in the same tax year (i.e. Stocks & Shares, Cash and Life Insurance). Therefore you can potentially contribute to two Mini ISAs during a single tax year. If you do not make contributions to the Maximum limit under any of these investment components, the balance cannot be carried forward to another tax year or transferred to a different ISA component. You must be careful not to invest money in a Mini ISA if there is any likelihood you will later in the same tax year wish to invest your full ISA contribution allowance into a Stocks and Shares ISA.

What are the tax benefits of an ISA?

Under current legislation ISAs have considerable tax incentives over other forms of investments or savings. You pay no tax on any of the income from your ISA savings or investments. This concession includes interest, bonuses and also dividends on shares (including investment trusts), Unit Trusts and OEICs You pay no tax on any capital gains achieved by your ISA investments (please note any losses cannot be offset against gains that are subject to Capital Gains Tax). On your behalf your ISA manager is allowed to reclaim the tax credits that are attached to dividends from UK companies (which from April 1999 amount to 10% of the dividend payment). Under the terms of a Life Insurance ISA, the insurer is not subject to tax on income or capital gains achieved on any investments used to back your ISA life insurance policy. You may withdraw your money at any time without losing any of the tax advantages. There is no requirement for you to declare income and/or capital gains from your ISA plans to the Inland Revenue. You don't even need to mention that you have an ISA on your Tax Return.

How long must I keep my ISA plan?

One of the major attractions of ISA plans is that they offer you excellent access to your money. You may withdraw your money at any time without losing any of the tax relief granted to your plan.

Some ISA plans may run for a fixed period or require you to give notice of withdrawal. With these particular plans you could lose some interest or bonuses should you elect to withdraw your money early. You should always read the terms of your ISA plan carefully and pay particular attention to any conditions applying to withdraw of your money.

Please note that if you invest in a Stock& shares or Life Insurance ISA you may not get back all the money you put in. This is more likely if you withdraw you money during the early years of your investment.

What happens if I die?

Any ISA plans you hold will end on the date of your death. No tax will due on any income or capital gains that have been achieved up to that date. However, if the plan continues after your death, then your personal representatives will be liable for taxation on any subsequent income or capital gains.

The value of any ISA plans will be added to you're the rest of your assets when calculating the value of your estate for Inheritance Tax purposes.

Under the terms of a life insurance ISA the proceeds of the policy will be payable at the time of your death. Although there would not tax to pay on the policy proceeds built up during you life, however if any interest is added by the life insurance company because of late payment of the claim, then this interest would be subject to taxation.

Can I change the savings or investments in my ISA plan?

The rules of ISAs allow you to change, within the same ISA component, from one savings product or investment to a different one whenever and as often as you require.

Should you wish to include new investment or savings opportunities that are not provided from your current ISA manager then you may have to transfer you money to another manager.

IWhat returns will I get from my investment?

This will depend on:- How long you invest for Any charges that apply Any withdrawals you make The performance of the funds

Where is my money Invested? You choose the sector where your money is invested. You may want to invest in a number of different sectors at any time to spread the risk. Each fund is professionally managed on your behalf. Each fund is divided into units and your investment buys units in the fund you choose. The price of these units depends on the value of the underlying investments within that fund. If the unit price goes up or down, so will the value of your Unit Trust. You can change your choice of funds

What about tax? Under current legislation, income is paid to investors net of tax. Dividend income is paid net of 10% tax. Both lower and basic rate taxpayers are deemed to have met their liability and have no further tax to pay. Non taxpayers cannot reclaim a refund of tax deducted. Higher rate taxpayers will have an additional liability of the difference between tax charged and their higher rate of tax. Distributions from non equity Unit Trusts are normally taxed as interest. For interest distributions, 20% tax is deducted at source. Non taxpayers cannot reclaim a refund of tax deducted. Lower and basic rate taxpayers have no further liability. Higher rate tax payers will have an additional liability of the difference between tax charged and the higher rate of tax. Authorised Unit Trusts are exempt from taxation on capital gains within the trust. However when an investor disposes of units or dies, there may be a liability for capital gains tax.

How long must I keep my Unit Trust? As with any investment connected to stocks and shares, you should be prepared to invest your capital over a period of at least five years. There is no restriction on how long you can invest beyond this.

Is a Unit Trust right for me? Before making any financial commitments like a Unit trust, you should give careful consideration as to whether this is the right course of action for you.

With Profits Bonds

With Profits Bonds offer an excellent home for your money, if you want to invest for a reasonably long period of time (usually more than 5 years) in a relatively safe fund.
They are designed to avoid the day to day fluctuations of the Stock Market by offering you a smoothed return. You can benefit from the underlying investment in the Stock market, along with any general profits made by the Provider.

The two most important criteria for choosing a With profits Bond are;
The financial strength of the insurance company
The underlying investment mix of the with profits fund

Although there are other important things to consider, these factors are the ones which will have the biggest influence on your pay out over a reasonable period of time.

We recommend you read our with Profits guide which will help you understand how they work.

If you think that a With Profits Bond might be what you are looking for, our professional advisers would welcome the opportunity to discuss your needs in more detail on the telephone.
Insurance company bonds are an excellent home for your investment, as an alternative to Unit Trusts, particularly if you are likely to benefit from the special tax treatment they
enjoy.

Unlike Unit Trusts, Investment Linked Bonds are free from capital gains tax when you sell your investment.

Each year, you are entitled to take a tax free income from your bond. When you sell your bond, there may be some liability for income tax. You can defer the payment of any tax until your bond is sold, which makes it tax efficient-especially if you are a higher rate tax payer and tend to use up your capital gains tax allowance in most years. If you would like more detailed information, please look at our Investment Linked Bond guide

Bonds must meet our stringent assessment criteria which are as follows:

Each Bond has to meet yours4money's stringent assessment criteria which are as follows;

Performance
Asset allocation
Investment philosophy
Costs
Credibility

They will also be classified in line with your personal attitude to investment risk and whether you are looking for income or growth

For any lump sum investment, there are a number of things to consider:
Do I require income or growth. When will I need the money. What are the tax implications for me. What level of risk am I prepared to take to maximise the return on the investment.