Individual savings accounts (ISAs) were introduced in April 1999. They replaced Tessas and Peps and are effectively a tax wrapper within which you can hold a range of different investments. The big advantage of ISAs is that returns are tax-free – gains on investments held outside an ISA are liable to income tax or capital gains tax.
ISAs offer a generous tax break but millions of savers fail to make use of their annual allowance. In a bid to encourage more people to invest in ISAs, the government has simplified the rules and increased the amount you can save tax-free