Individual savings account (Isa)

Individual savings accounts (Isas) are a way of saving and investing without paying income tax or capital gains tax. An Isa is not an investment in itself, but a ‘wrapper’ into which you can put investments. Strictly you do not buy an Isa, but rather an Isa wrapper and an investment, though many fund management companies do sell them as a package.

You can split your £11,520 annual Isa allowance between cash and equities. The limit is based on contributions, so you can’t put in £11,520 at the start of the year, take out £3,000, then top it up again, as you have already used your limit up.

Finally, there are two types of Isa – a stocks and shares Isa permits you to invest the full £11,520 in shares, while a cash Isa only lets you invest up to £5,760 in cash.

• See Tim Bennett’s video tutorial: Why you need an Isa.

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When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.