CAT / FIA FTX Syllabus C. Income Tax Liabilities - Individual Savings Accounts and other tax exempt investments - Notes ^{6 / 7}

Tax-free investments

Investment income exempt from income tax includes:

1. Premium bond prizes

   Betting and gaming winnings, including premium bond prizes and Lotto Prizes

2. Interest on NS&I Saving Certificates

3. Income from ISA

Individual Savings Accounts (ISA’s)

have for many years been the most common form of tax efficient investment. 

The main advantages of ISAs are:

1. Income is free of income tax

2. Disposals of investments within an ISA are free from capital gains tax

3. Disposals of investments within an ISA are free from capital gains tax

Components of an ISA

1. Cash - for example in a bank account

2. Stocks and shares listed anywhere in the world

National savings

These offer a variety of products some of which are tax free, e.g. National Savings Certificates

However, some National Savings & Investments (NS&I) products are taxable, namely:

• NS&I Easy Access account / NS&I Direct Saver Account

• NS&I Investments accounts

• The income is received gross without deduction of tax at source.

  The nature of the investments are historically risk free.