The main tax advantage of an ISA is that the income and capital growth is free from income and capital gains tax. It therefore is the most accessible tax efficient way to save and it is open to individuals aged 18 or over (16 or over for cash ISAs).

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In July 2014 the rules changed giving more flexibility on transfers between cash ISA's and stocks and shares ISA. In March 2015 Budget, the Chancellor announced further changes allowing individual ISA holder's to replace withdrawn money in the same tax year.

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There are two types of ISA

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1. Cash ISA - this is effectively a deposit account which is placed in a tax-free ISA environment.

2. Stocks & Shares ISA - this allows for an individual to invest in range of equity & bond-based funds placed in a tax-free ISA environment.

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ISA allowance for 2023/24 is £20,000. You must live in the UK.

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Junior ISA (JISA)

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Although an existing CTF can receive deposits, no one can now open a new one. Also if opening a JISA , all CTF monies have to be transferred into it. It is possible to maximise contributions to a CTF before transferring into a JISA without those contributions affecting the amount that can be deposited in the JISA in the same tax year. The account is managed by a parent or guardian until the child is 16 where the JISA is can be given to the child (not accessible until age 18). Upon the age 18 the JISA becomes standard ISA status. The maximum allowance for a JISA is £9,000 for 2023/24. You must live in the UK.

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HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen

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The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

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