What is an ISA?
An Individual Savings Account (ISA) is a tax-efficient wrapper into which you can place a wide variety of assets to protect them from capital gains tax on growth and additional income tax on income.
There are currently two types – the cash ISA and the stocks and shares ISA - and you can invest a combined total of up to £10,680 in these during the 2011/12 tax year. The cash ISA element allows you to invest up to £5,340 into a deposit account, National Savings or a qualifying cash fund then the balance between this cash investment and the full allowance can be invested in a stocks and shares ISA. The latter can hold various assets, including equities and bonds, and investment can be either direct or via collective investment funds.
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