Individual Savings Account (ISA):

An Individual Savings Account (ISA) is a tax efficient wrapper available to residents of the UK. By using an ISA you can invest in cash or longer-term investments such as stocks and shares or insurance and not pay tax on most of the income (this is why it is called a tax efficient wrapper). There is no capital gains tax to pay on profits either.

An Individual Savings Account (ISA) is a savings account on which the return is tax-efficient, and which need not be declared in the investor's tax return. There are two components: (i) cash; and (ii) stocks and shares, and life assurance policies.

An investor has an overall annual investment limit of £10,200 (from 6 April 2010) of which no more than £5,100 can be in cash (i.e., all £10,200 can be in stocks and shares, and life assurance policies, if the investor wishes).

The Government announced in Budget 2010 that from April 2011 and over the course of the next Parliament, ISA limits will be indexed annually in line with the Retail Price Index.

The values cannot be guaranteed and can go up as well as down. The returns in ISAs are not completely tax free as they have been taxed by way of the dividend.

For more information click on the links below:

Cash ISA*

Investment ISA*

Compare ISAs*