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ISA stands for Individual Savings Account and it's a special type of savings and investment account, which is more or less immune from tax. So an ISA isn't an investment itself, but you put savings or investments in it.

There are three possible components to an ISA.

  • You can save cash inside an ISA and the interest will be tax-free;

  • You can invest in funds or shares in an ISA and any capital growth and dividend income will be tax-free;

  • You can invest in certain life insurance products in an ISA and the benefits accrued will be tax-free.

There are all sorts of rules and regulations governing eligibility, how much you can invest in each component and how many ISAs you can have. And just to complicate things even further, there are two types of ISA - the Mini and the Maxi - and you can only invest in one type in each tax year (which runs from April 6 to April 5 the following year).

ISAs were introduced in 1999. Before this time a similar system existed called PEPs. These were first introduced in 1987. Some people have invested in PEPs and ISAs every year and managed to build up a substantial sum, completely protected from tax.

ISA guide
How much can I invest in an ISA
Mini and Maxi ISA guide
CAT standard ISA guide
Cash ISA guide
Share ISA guide

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