Investing For Growth: Maxi or Mini? Get to know the ISA

AFTER 6 April, individual savings accounts will be the only tax-free savings vehicle on offer. ISAs can have three investment components: cash, stocks and shares, and life insurance. Investors seeking capital growth will be cheered to hear that they can continue making equity investments in an ISA. Moreover, qualifying funds don't have to have at least half their assets invested in the European Union.

The bad news is the ISA investment limits. With the exception of the 1999/2000 tax year, you can invest a maximum of pounds 5,000 in an ISA, split between up to pounds 1,000 in cash, up to pounds 1,000 in life insurance and up to pounds 5,000 in stocks and shares each tax year subject to the overall pounds 5,000 limit. For 1999/2000, the limits for cash and equities are a maximum of pounds 3,000 and pounds 7,000 respectively.

The annual limit for insurance investments is the same in 1999/2000 as it will be in future years. Any policy that insures the life of the policyholder is eligible for inclusion in an ISA. Joint life and multiple life policies are not eligible and the investment can't be used for mortgage security.

Maxis and Minis

ISAs have two separate structures, Maxis and Minis. In any tax year investors can hold either one Maxi or up to three Mini plans. A Maxi ISA must be managed by a single plan manager and must offer a stocks and shares component, with or without the cash and life insurance elements.

A Mini ISA can hold just one of the three types of investment and you can choose to have up to three separate plans provided by up to three managers.

Once made, investments count for the full tax year, even if withdrawals are made. For example, if you start a Maxi ISA and invest pounds 3,000 in cash and pounds 4,000 in equities (in tax year 1999/2000) and then withdraw pounds 2,000 of the cash, this doesn't mean that you can invest a further pounds 2,000 in equities.

Similarly, if you decide to hedge your bets and start a cash Mini ISA, you will then be restricted to an equity Mini ISA in that tax year, with an investment limit of just pounds 3,000.

A word of warning: choosing a Maxi ISA will restrict you to a single plan manager, and providers of top-performing funds may not offer the best interest rates on your cash and insurance deposits. Similarly, banks and building societies paying good rates of interest may not be able to match the performance of the top-ranked investment funds.

Kathleen Hennessy is assistant editor of 'Moneywise' magazine.

isa guides

If you sent off for a guide some time ago, make sure it's up to date; the Woolwich guide originally issued in November 1998 was published before the rules were finalised and contains a fundamental error about which types of equity investment are permitted in an ISA.

A&L, 0800 056 8000

Virgin Direct, 0800 917 9797

AITC, 0171-431 5222

Abbey National, 0800 222397

Aberdeen Prolific, 0345 886666

Aitchison & Colegrave IFAs,

0800 838920

Bates Inv Serv, 0113-295 5955

Chase de Vere, 0800 805806

CU, 0171-662 0620

Fidelity, 0800 137297

Halifax, local branch

Inland Revenue, 0645 000404

Invesco, 0171-626 3434

IFA Promotion, 0117-971 1177

Legal & General, 0500 909090

Liverpool Victoria,

0171-405 4377

M&G, 0990 559900

Midland Bank, 0800 180180

Portman BS, 01202 292444

Save & Prosper, 0800 403030

The PEP Shop, 0115 982 5105

Towry Law, 0345 889993

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
scotland decidesIs a huge gamble on oil keeping First Minister up at night?
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
Life and Style
techApple has just launched its latest mobile operating software – so what should you do first?
News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
PROMOTED VIDEO
Arts and Entertainment
Lionel Messi in action for Barcelona
filmSo what makes the little man tick?
Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
Sport
Cesc Fabregas celebrates his first Chelsea goal
footballChelsea vs Schalke match report
Arts and Entertainment
Toby Jones (left) and Mackenzie Crook in BBC4’s new comedy The Detectorists
tvMackenzie Crook's 'Detectorists' makes the hobby look 'dysfunctional', they say
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week