An ISA is a tax efficient ‘wrapper’ that can be placed around a wide range of cash savings and stock market based investments. With many hundreds of providers, there has never been a more important time to get independent financial advice before selecting your ISA. The good news for ethical investors is that there are now a wide range of ethical options within an ISA, with many newer investment funds and well established players now in the market.

First time investors should, unless circumstances are exceptional, consider investing in an ISA. The problem is, which type of ISA to have?

An individual can open one cash ISA and one stocks and shares ISA in the same tax year. There are limits to the amount that can be invested as described below:

ISA Limits

From 6 April 2010 the ISA limit is £10,200 for an individual in each tax year, with up to £5,100 of that available for a cash ISA and any remainder up to the limit in a stocks and shares; the maximum that can be added to a stocks and shares ISA is therefore £10,200 if zero is placed in a cash ISA.

Cash ISA

Holding a cash ISA can ensure a good rate of interest, often better than non-ISA accounts, and all of the interest is tax-free. A number of cash ISAs offer instant access, so you are not tying your money up by investing in a cash ISA. You should consider holding savings outside of your current account in a cash ISA, unless the focus is on maximising long-term capital growth. In this case, a Stocks and Shares ISA might be appropriate.

Stocks and Shares ISA

Without doubt, this is the first contract to consider when making an equity (stock market) investment. However, the majority of investment funds in the UK have no social, ethical or environmental criteria. There are now a wide range of funds that apply ethical criteria, and the issues covered vary from fund to fund, with a variety of positive investment techniques and negative methods for excluding companies from investment. An independent adviser, such as Ethical Investors, is best placed to help you find the ethical fund that matches your ethical views and investment risk profile.

Please contact us to find out more about how we can assist with your investment planning.

Latest ISA Rates

From the vast number of different Cash ISA providers, we regularly review those that are either ethically neutral or ethically positive, and publish a selection of better interest rates here.

Click here for latest ISA Rates