What are ISAs?

ISA is short for ‘Individual Savings Account’.
There are two types of ISA – Cash ISA and Stocks & Shares ISA.
Stocks & Shares ISAs are simply a tax-efficient umbrella under which you can invest in our unit trusts – meaning you have no further tax to pay on your investment returns.
There is, however, a maximum annual subscription allowance each tax year for ISAs.
And unlike most other investments, you do not need to record your ISAs in your annual tax return.
You still need to choose the Unit Trusts you want to invest in within your Stocks & Shares ISA.

ISA Limits

For the 2009-10 tax year:

The standard overall annual ISA investment allowance is £7,200. This can be invested completely as Stocks & Shares, or partly as cash. You can invest up to £3,600 in a Cash ISA, the remaining amount must be invested in a Stocks & Shares ISA, up to the total limit of £7,200.
However, if you were born on or before 5th April 1960 your overall annual limit has now been increased to £10,200. You can now invest up to £5,100 in a Cash ISA, the remaining amount must be invested as a Stocks & Shares ISA, up to the total limit of £10,200.

For the 2010-11 tax year:

The standard overall annual ISA investment allowance increases to £10,200 for everyone. This can be invested completely as Stocks & Shares, or partly as cash. You can invest up to £5,100 in a Cash ISA, the remaining amount must be invested as a Stocks & Shares ISA, up to the total limit of £10,200.