ISA's Explained?...'what is an ISA?'

What is an ISA?

Individual Savings Accounts (ISAs) were introduced in April 1999. They replaced TESSAs and PEPs and are effectively a tax wrapper within which you can hold a range of different investments. The big advantage of ISAs is that returns are tax free - gains on investments held outside an ISA are liable to income tax or capital gains tax.

Savers over the age of 16 and resident in the UK can invest up to £10,680 (cash + stocks and shares) in a single tax year.

The tax year runs from April 6 to April 5 and it is important to use as much of your annual tax free savings allowance as you can within that time as it cannot be carried over into the next financial year.

You can open one Cash ISA and one stocks and shares ISA each tax year. Up to £5,340 can be invested in a Cash ISA. The remainder of your allowance can be invested in a stocks and shares ISA.

See Cash ISA's..click here