Save money with ISA

Whilst it's easy to spend money in the United Kingdom (and believe me, I know this well!), these days it's also simple to save money! Free from income tax and capital gains tax, Individual Savings Accounts ISAs) are the best way for anyone and everyone to start a savings account and consider investments. Securing your financial future has never been easier, and cash ISA or shares ISA are available to all regardless of your income or current economic standing.

The ISA scheme was introduced in 1999 to replace the previous Tax-Exempt Special Savings Accounts (TESSAs) and Personal Equity Plans (PEPs). From the tax year 2008-09, ISAs will even be undergoing reforms to make the PEP and ISA rules aligned to introduce any remaining PEPs to the ISA system. The Mini and Maxi distinctions of ISAs will also be removed, but let's have a look at ISAs at how they stand today.

Currently, any individual can invest up to 7,000 in cash and shares in either one Maxi ISA or one Mini cash ISA (up to 3,000) and one Mini stocks & shares (up to 4,000) per tax year. The difference between Mini and Maxi options is that Mini ISA can be held with the same or different providers, while a Maxi ISA can only have a single provider. The proposed reform measures will simply abandon these distinctions, allowing greater ease of administration, flexibility and understanding for the saver.

ISAs aim to encourage a lifetime of saving and asset ownership, providing an option other than pensions for favourably taxed investment. However, before undertaking any investment activity, please remember that it's always best to consult a financial adviser. Better yet, compare the advice and opinions of two or three advisers to find someone you are confident and comfortable with managing your financial future. Never invest in anything that is not entirely clear, and be wary of anything that sounds too good to be true!