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Individual Savings Accounts (ISAs) are available to all UK residents over 18 years of age (or 16 years of age if taking out a Cash ISA). They benefit all taxpayers, especially those paying the higher rate.

Individual Savings Accounts (ISAs) are available to all UK residents over 18 years of age, 16 years of age for the Cash ISAs. They benefit all taxpayers, as any income or capital gains received from investments held within an ISA do not have to be declared to the tax man.

ISAs can invest in cash or longer term investments like stocks and shares (including unit trusts, investment trusts, Open Ended Investment Companies, some fixed interest securities, or any share quoted on a stock exchange recognised by the Inland Revenue).

Recent legislation has changed the ISA rules and came into force in the 2008/2009 tax year. The distinction between Mini and Maxi ISA's has now disappeared and have been replaced with a choice between a Cash ISA and Stocks and Shares ISA.

Cash Mini ISAs and TESSA only ISAs, (TOISA's) automatically become Cash ISA's. Personal Equity Plans, (PEP's) automatically become Stocks & Shares ISA's.

Investment Limits

Cash ISAs - Cash ISAs are wildly available with different interest rates. It is a good idea to shop around for the best Cash ISA rates. It is important however to understand the conditions attached to those rates, for instance access may be restricted in order to achieve that particular rate. The limit for a cash ISA in 2013/2014 tax year is £5,760

Stocks & Shares ISA

You can invest £11,520 per tax year in a Stocks & Shares ISA and there is no upper limit on the Stocks and Share holdings. Therefore your entire holdings can be in Stocks and Shares. However if you hold a Cash ISA which you have taken out in the same tax year, you will be restricted to the difference between the overall ISA limit of £11,520 and what you have deposited in the Cash ISA. The Stocks & Shares ISA is one account and managed by one provider. The maximum that you can put in a Cash Isa in a Tax year is £5,760

You can therefore invest in one Stocks & Shares ISA and one Cash ISA in the same tax year, subject to the overall limit of £11,520 for the 2011/2012 tax year. This limit will be increased in line with inflation going forward.

Legislation relating to Individual Savings Accounts is subject to change.