ISAs Explained: ISA Allowance & Types.

Individual Savings Accounts (ISAs).
Each year the annual ISA Allowance is set by the Treasury.  The Individual Savings account currently allows you to invest up to £7,200 a year with the deadline to use the ISA allowance being 5th April. New ISA limits have been set by the government which increase the allowance to £10200, see below.

An ISA can contain up to 2 different types of investment: cash (including national savings plans) and stocks and shares.

ISAs tend to be a very popular savings vehicle as contributions grow tax efficiently. ISAs are also very flexible and allow lump sum as well as regular fixed contributions. ISAs are open to anyone over 18, resident and ordinarily resident in the UK. 16 –17 year olds can have a cash ISA.
 

Mini & Maxi ISA allowances - New ISA simplification.
In order to simplify the ISA Structure, the distinction between Mini & Maxi ISA's has disappeared. Nowadays there's only be a distinction between Cash ISAs and Stocks & Shares ISAs. 

ISA Allowances.
From 6th April 2008, ISA Investment limits were increased. The limit for a cash ISA is currently £3600, the Stocks & Shares ISA is £7200 and the overall allowance is £7200.

From October 2009, ISA limits will increase for people aged 50 to £10200, up to £5100 of which can be saved in cash. From 6 April 2010 everyone can benefit from the new ISA limits.

Transfer between ISAs
It is now possible to transfer money held in a Cash ISA to Stocks & Shares ISAs without affecting your annual allowance or the tax status of the investment.

From April 2008 PEPs ceased to exist and any remaining PEP investments will have been transferred to Stocks & Shares ISAs. The investments within the PEP will stay the same in the ISA and will retain their tax status.

The FSA do not regulate National Savings ISAs.

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