ISAs 'beneficial regardless of capital'

Consumers do not need to save a small fortune in an ISA account to yield a valuable return, it has been suggested.

According to Danny Cox, head of advice at Hargreaves Lansdown, underestimating the value of ISAs is "one of the most common savings mistakes" people make.

He explained that the principle benefit of individual savings accounts is that they offer a tax-free haven for capital.

Mr Cox added: "The tax savings start from the very first pound you invest, and in most cases it costs no more to place funds inside an ISA than to hold them outside. Therefore investors generally receive these benefits free of charge."

He noted that while consumers pay tax on most investments, there is no capital gains tax payable on ISA accounts and no further levy on the income.

Last week, Linda McBain, head of banking at Investec, claimed that many people are failing to check the best savings rates on ISA accounts, meaning they are potentially missing out on valuable income.

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2009-10-22 15:05:42 © Moneyextra.com