These TAX FREE savings plans were introduced in 1999 to replace the old personal equity plans (PEP) and tax exempt special savings accounts (TESSA).

There are two types of ISA - the "main" plan, essentially available to adults, and the "Junior ISA".

ISA plans, TAX FREE in the hands of the investor, can accept periodic investments (e.g. monthly) or one-off, single lump sum, payments. When started the life of this particular investment was ten years from 1999/2000. Individual Savings Accounts are reviewed by the government regularly to evaluate what is to happen to them in the future.

The maximum total investment is £10,680 in the tax year 2011/12. Up to half of this can be in cash.

[Plans taken out between April 1999 and April 2004 benefited from a further 10% "tax credit" on dividends from UK equities. This was not extended in any recent Budget speech so "equity ISA plans" will loses out a little because of this.]

Changes in 2002/03 mean that ISA plans can invest in wider ranges of investment.

The Junior ISA was launched on 1 November 2011.

It is for young people under 18 (born before 1st September 2002 or after 2nd January 2011) who live in the UK and who do not already have a Child Trust Fund account

Each child can have one cash and one ‘stocks and shares’ Junior ISA at any one time.

Anybody can put money into a Junior ISA. The total limit for payments into Junior ISAs is £3,600 in each tax year.

As with all ISA investments there will be no tax to pay on any interest or gains.

The money in a Junior ISA belongs to the child but they can’t take the money out until they are 18. They can then decide what they want to do with it. If the child chooses not to take the money out the Junior ISA will automatically become a "main" ISA.

As always, we remind all clients that the value of investments such as this is not guaranteed. The value can go up and down dependent on performance.