In the past you may have heard of mini ISAs and maxi ISAs but as from April 2008, this has all changed and the procedure simplified. Nowadays, you just have an ISA allowance and you can choose to use your allowance in either a cash ISA a stocks and shares ISA or both.

Cash ISA

A cash ISA allows an individual to save up to £3,600 tax free in any one tax year. The restrictions are that you can only save with one provider in any one tax year.

Stocks and Shares ISA

With a stocks and Shares ISA you can save investments of up to £7,200 in any one tax year. This includes cash, stocks and shares and other investments. Again, you can only save with one provider in any one tax year.

An individual can have both a cash ISA and a stocks and shares ISA if they wish but cannot save more than the total of £7,200 in any one tax year, for each type of ISA.

How do you get an ISA?

ISAs are offered by what are known as ISA managers and these can be banks or building societies, or financial advisers or even some retailers. Any ISA manager has to be authorised by the Financial Services Authority or FSA and approved by the HM Revenue and Customs (HMRC).

Advantages of an ISA

- You don't pay any tax on the interest you receive from your savings or capital gains from your investments

- You can have easy access to your money and withdraw it at any time without penalty, although some providers may request some notice before you withdraw

- With nest ISA's you can pay as little or as much as you want into your ISA at any time you want, although some products will require a minimum open balance. There is no requirement to save regularly

Anyone who has any kind of savings or spare cash should be making full use of their right to open an ISA as it is a convenient and effective way to grow your money. Before opening an ISA with any one provider, make sure that they are indeed authorised by the FSA and approved by HMRC. Also, different providers offer different rates and terms and conditions so if you are in doubt as to which one is best for you, seek the advice of an independent financial adviser first.