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Maxi ISA Guide

What is a Maxi ISA

A Maxi ISA enables you to invest up to £7,000 each year tax free.

A Maxi ISA can be made up of two components:

a) Cash

b) Stocks and shares

You can save up to £3,000 a year in cash and you can invest up to £7,000 in stocks and shares.

Cash Component of a Maxi ISA

The return on your investment in the cash component of a Maxi ISA will be via regular tax free interest payments. This means that you’ll make more money investing your money in a Maxi ISA than in a regular savings account where you do have to pay tax on the interest you earn.

The cash element of a Mai ISA pays interest monthly, quarterly, six monthly or annually.

Stocks and Shares Element of a Maxi ISA

The performance of stocks and shares is impossible to predict entirely accurately so there is an element of risk involved with this investment option. .

However, most Maxi ISA investors tend to buy a collective investment like an investment or unit trust or a corporate bond fund to diversify their investment thereby spreading the risk.

NB The majority of Maxi ISA providers don’t have a cash option which means that Maxi ISAs are generally weighted towards the investment element.

Who Can Have a Maxi ISA

If you are aged 18 or above and are a UK resident, you are entitled to a Maxi ISA.

What Are the Restrictions on Maxi ISAs

• Maxi ISAs have to be owned by individuals. This means that you can’t have a joint Maxi ISA and you can’t hold a Maxi ISA on someone else’s behalf.

• You can only open one Maxi ISA each tax year. This means that you can’t have two different Maxi ISAs with different providers.

• If you open a mini ISA, you can’t open a Maxi ISA in the same tax year.

• You can only contribute to one Maxi ISA each tax year.

Maxi ISA Transfers

It is possible to transfer your Maxi ISA to a fund where you think you would get a better return.

• If you are transferring money that has been invested in a previous tax year, you can do so either in whole or in part.

• When transferring money that you have invested this year, you need to transfer all of the money to your new Maxi ISA.

U-Manage enables you to transfer you Maxi ISA onto the Fidelity Funds network platform so that you can:

• View all your investments under one account

• Streamline your investments

• Only receive one statement a year to simplify your paperwork

• Switch to any funds within the network ( there are over 1,100 to choose from)

Click here to complete a Maxi ISA transfer application form

Tax Benefits of a Maxi ISA

• You are not required to pay any tax on income or capital gains arising out of your Maxi ISA.

• You receive tax breaks on dividends with a Maxi ISA.

• You do not have to inform the Inland Revenue about any detail of your Maxi ISA.

• Your Maxi ISA will be terminated upon your death. For the purposes of inheritance tax, their value is included in your estate.

Advantages of Maxi ISAs

• Maxi ISAs enable you to invest up to £7,000 tax free each tax free.

• Maxi ISAs are exempt from income and capital gains tax

• You receive a 10% tax credit on dividends received from UK equities for the first five years of your Maxi ISA.

CAT Standards For Maxi ISAs

CAT Standards are a set of criteria that the government introduced for Maxi ISAs. Maxi ISAs that meet these CAT standards offer:

• Fair charges

• Easy access

• Decent terms

All Maxi ISAs that subscribe to the CAT standard have to allow you to access your money within seven working days.

Before choosing a Maxi ISA provider, it’s a good idea to check that they meet the CAT Standard guidelines.

Click here to apply for a Maxi ISA

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