Individual Savings Accounts (ISAs) are available to all UK residents over 18 years of age, 16 years of age for the Cash ISAs. They benefit all taxpayers, as any income or capital gains received from investments held within an ISA do not have to be declared to the tax man.
ISAs can invest in cash or in stocks and shares (including unit trusts, investment trusts, Open Ended Investment Companies, some fixed interest securities, or any share quoted on a stock exchange recognised by H M Revenue and Customs.)
The overall ISA limit has increased to £11,280 for the 2012/2013 tax year. Up to £5,640 can be placed within a Cash ISA and the balance (up to £11,280) into a Stocks and Shares ISA. You can take out a Stocks & Shares ISA and a Cash ISA in the same tax year subject to the overall limit applicable to that tax year. For example if you placed £2,000 in a Cash ISA, you could then invest the balance of £9,280 in the Stocks & Shares ISA.
Cash ISA's - Cash ISA's are widely available with different interest rates. It is a good idea to shop around for the best Cash ISA rates. It is important however to understand the conditions attached to those rates, for instance access may be restricted in order to achieve that particular rate.
Stocks & Shares ISA- Assuming you haven't invested in a Cash ISA in the same tax year you can invest £11,280 in the current year (2012/2013) in a Stocks & Shares ISA.
THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.