Barclays Stockbrokers reports increased ISA sales

Barclays Stockbrokers has reported a 26% per cent increase in ISA account openings for the period from the beginning of January up to 28th February 2008 compared with the same period in 2007.

The surge in sales reveals that investors remain focused on using their tax allowance and confident in the medium and long term performance of their investments, despite recent market conditions. Alongside this positive behaviour, Barclays Stockbrokers has created ten top tips for ISA investing.

1) Use your ISA allowance each year. If you are investing, whether actively or occasionally, an Investment ISA will protect you from paying capital gains tax or income tax on any growth of investments within the ISA. £7,000 may not appear a huge amount initially but over time the amount of tax saved can grow into significant amount, in addition to the investment returns that are added.

2) Consider Protected Investments. Certain structured products and funds can offer your capital back at maturity, plus the benefit of possible additional returns and even income; during periods of market volatility. As with all investments their value can fall as well as rise.

3) Consider charges and fees; these can significantly erode returns. Look out for hidden charges that may be included in the underlying investment product as well as the cost of the ISA wrapper. Also find out if there are any fee breaks on investments in funds if they are held within ISAs.

4) Regularly review performance of ISA investments. Remember you can change the underlying investment within an ISA without losing the tax protection. You must remember that the past performance of an investment is not a reliable indicator of how it will perform in the future.

5) Don't wait until the last minute. The earlier in the tax year that you invest your allowance the longer your investments benefit from tax free growth.

6) Review your provider. You can move an ISA from one plan manager to another without losing the tax protection. Make sure that you have access to your investments, and if not look for a provider that does and ask them to transfer your portfolio.

7) Use your cash and equity allowance. If you have invested in a Cash ISA make sure that you have used the other £4,000 of your ISA allowance which can be invested in an Investment ISA.

8) ISA / PEP convergence. From 6th April 2008 it is possible to merge your PEP, Mini ISAs and Maxi ISAs giving you the potential to reduce your costs; ultimately letting investors maximise returns.

9) Transfer from cash to equities. Do you favour the potentially better returns offered by investments than cash? It will be possible to transfer Cash ISA to a Stocks & Shares ISA from 6th April 2008 and keep the tax protection. You will need to consider the increase risk to your investments you will be taken compared to cash funds.

10) Use SIPPS to complement ISAs. Having made maximum use of your ISA allowance, look at holding investments in other tax efficient investment vehicles. For example, if you are saving for the long term, SIPPs can offer even better tax benefits than an ISA.

Amy Nauiokas, MD and Head of Barclays Stockbrokers, said: “We are delighted to see investors actively taking their tax allowance in 2008 despite the recent volatility. The 26 per cent increase in new ISAs over 2007 reinforces the investor belief that investments will outperform over the medium to long term.

“Our ten top tips show that the benefits of ISA investing are clear. ISAs should be regarded as long term strategic tax planning tools which not only maximise investors’ returns but also make their lives easier through their simplicity. Investors don't have to pay higher rates of tax, worry about CGT or even list their ISA assets on their tax returns. As always I urge investors to be early birds – the earlier investors open their ISAs the sooner they can reap the tax benefits.”