Q: What are the different types of Isa available?
There is an annual allowance each tax year (April to April) for Isas.
This allowance can be split between a cash and a stocks & shares Isa and can be with the same or different providers.
The current limit (for 2011 to 2012) is £10,680, up to £5,340 of which can be in the form of cash.
The two groups of qualifying Isa investments are for a cash ISA:
* building society accounts.
* bank deposit accounts.
* authorised money market schemes (cash funds).
* certain National Savings & Investments products.
* stakeholder cash products.
* collective investment products that provide a cash-like return.
* life assurance that provides a cash-like return.
For stocks and shares Isa:
* equity shares listed on a recognised stock exchange.
* many authorised unit trusts, investment trusts, open ended investment companies and other collective investment schemes.
* building society permanent interest bearing shares (PIBS).
* corporate bonds, UK government securities (gilts) and other European government securities (with more than five years to run to maturity when purchased for the Isa).
* life assurance.
* cash may also be held on deposit temporarily, but only for the purpose of investing in qualifying shares and securities.
* stakeholder medium term products.
Junior Isas – available as cash or stocks & shares - have replaced the child trust fund.
Anyone with parental responsibility for an eligible child can open Junior Isas on the child’s behalf, according to the IMA.
Eligible children aged 16 plus can open a Junior Isa for themselves.
A child can have a stocks & shares and/or cash Isa but investments cannot exceed a total of £3,600 a year, which will be indexed by CPI from 6 April 2013 onwards.