Uses of ISAs

ISA's can be used far a variety of savings purposes.

As well as an obvious way of protecting your nest egg from tax, people also use ISAs as a repayment vehicle for a mortgage, or as a means of supplementing retirement savings.

As a mortgage repayment vehicle

ISAs work well as a savings vehicle, used to repay the debt of an interest only mortgage. However you must check that the annual subscription limit is sufficient for the amount that you will need to invest.

As a means of supplementing retirement income

ISAs have different rules and tax breaks to pensions and therefore can offer a distinctive option to conventional retirement vehicles.

Pensions are still regarded as the main way of saving for retirement, but their relative lack of flexibility has opened the way for new approaches. Your contributions to a pension receive tax relief at your highest rate of tax, but when it comes to taking an income, you may be liable to income tax.

In contrast, ISA's do not enjoy tax relief on premium, but you can withdraw income and capital free of tax whenever you wish.