ISA Guide

An ISA is a tax efficient individual savings account, launched in 1999 to replace PEPs and TESSAs. The requirements for taking out an ISA is that you be 16 or over (although you can only invest in the cash side of an ISA until you are 18) and that you are a resident of the UK. You cannot hold a joint ISA with someone else, or have one on someone else's behalf.

Limits on Investment

You can save up to £7,000 per tax year until the tax year ending April 5th 2005. Beyond this date, you will be able to £5,000 per tax year. You can invest lump sums, but you must confirm with the ISA provider as to what the minimum amounts you can invest as this will vary.

Maxi and mini ISAs

ISAs come in maxi and mini forms and there are investment limits on each. Every tax year, you are able to invest up to £3,000 in cash in a maxi ISA, up to £1,000 in life insurance and the balance up to £7,000 in unit trusts, stocks and shares.

Currently, you are able to invest up to £3,000 in a mini ISA, up to £1,000 in life insurance and up to £3,000 in unit trusts, stocks and shares. You are not able to buy a maxi ISA in the same tax year as buying a mini ISA and vice versa.

CAT Standard

The Charges, Access and Terms (CAT) Standard, was introduced by the Government to help savers choose an ISA that is simple, clean and fair. It does not mean that a product has been endorsed or approved by the Goverment or guarantee in any way that your investment is risk free (especially in stocks and shares ISA).

Tax Benefits

Eligible individuals will find an ISA is a tax efficient investment. Benefits include income and capital gains tax benefits, not having to declare an ISA on your tax form and the ISA manager will claim back all the income tax for you.