With an ISA you can save up to £7,200 each year and not pay UK tax on the income you receive from your investment.

Types of ISA - Cash or Stocks and Shares
 
An ISA can be made up of an investment in cash, or investments like stocks and shares or insurance.  Individual savers are able to invest in two separate ISAs in any one tax year: one cash ISA and one stocks and shares ISA.

Investment limits

For cash ISAs, an individual can invest up to £3,600 a year, and can only invest with one provider in any one tax year.

For stocks and shares ISAs, an individual can invest up to £7,200 a year, and can only invest with one provider in any one tax year.

If an individual wants to invest in both a cash ISA and a stocks and shares ISA in the same tax year, the separate limits for each type of ISA still apply, but the individual cannot invest more than £7,200 in total.  The individual’s cash ISA and stocks and shares ISA can be with either the same or with different providers.

Transferring an ISA

• You can transfer your cash ISA to another ISA manager, either into another cash ISA or into a stocks and shares ISA.

• You can transfer your stocks and shares ISA to another ISA manager, but only into another stocks and shares ISA. You cannot transfer a stocks and shares ISA into a cash ISA.

• You are able to transfer some or all of the money saved in previous tax years without affecting your annual ISA investment allowance.

• You are also able to transfer money saved in the current tax year.  Such transfers must be the whole amount saved in that tax year in that ISA up to the day of the transfer.  Once the money is transferred, it is treated as if it had been invested directly into the new ISA in that tax year.  You are then still able to save up to the full remaining balance of your £7,200 annual ISA investment allowance in that tax year, including up to £3,600 in a cash ISA.

Tax benefits of ISAs

1. No tax payable on the income you receive from your ISA savings and investments.
2. No tax payable on capital gains arising on your investments.
3. You can take your money out at any time (but some types have a notice period).
4. You do not have to tell the revenue about income and capital gains from ISA savings and investments.