ISA

A tax wrapper for investments that offers generous tax breaks.

Individual Savings Accounts (ISAs) were introduced in April 1999. They replaced TESSAS and PEPs and are a tax wrapper in which you can hold a wide range of investments or cash.

ISAs offer generous tax breaks - gains on investments held within an ISA are not liable to Capital Gains Tax and any income earned is not liable to additional tax (although any tax deducted at source on dividends cannot be reclaimed).

Cash ISA

An ISA can contain two components. A Cash ISA is a cash deposit that is similar to any other ordinary savings account, apart from the tax-free status. A TOISA must consist solely of a cash deposit.

See Cash ISA for more information

Stocks and Shares ISA

In the stocks and shares component the money is invested in 'qualifying investments'. As a consequence, the risk profile of the ISA may be anything from low to high. The investments may also include or consist of equities, property funds, corporate bonds or other assets such as commodities. This element may be self-invested and managed through a stockbroker, or you can invest through collective investment schemes such as Unit Trusts, OEICs or Investment Trusts.

See Stocks and Shares ISA for more information.