What is an ISA?

Individual Savings Accounts: ISAs allow you to save cash or shares without paying tax

Individual savings account, a scheme allowing individuals to hold cash, shares, and unit trusts free of tax on dividends, interest, and capital gains; in 1999 it replaced both personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs).

Interest you earn from a savings account is subject to income tax. Depending on your income tax banding, up to 45% of any interest you earn goes straight to the taxman!
Cash ISAs are different

ISA is short for an Individual Savings Account. Unlike normal savings accounts or investments, interest earned from a cash ISA is completely tax-free.

The higher the rate of tax you pay, the more beneficial a cash ISA will be compared to a normal savings account.

Cash ISAs can only have a maximum amount paid into them in each tax year (which runs between 6 April and the following 5 April).
2014-15 tax year the Cash ISA allowance is £5,940.
You must pay your money in before 5 April 2015, to make the most of your 2014-15 ISA limit.

Types of Cash ISA available -

• Variable rate cash ISAs
• 1 year fixed rate cash ISAs
• 2 year fixed rate cash ISAs
• 3 to 5 year fixed rate cash ISAs

What other types of ISA are available?

Cash ISA
Variable Rate ISA
Fixed Rate ISA
Self Select ISA
Junior ISA
Stocks and Shares ISA