Back in 1999 the Labour government decided to do away with the old tax-free savings initiatives (namely the TESSA and the PEP) to introduce a fresh way of saving for the future. Their aim was to try and encourage UK residents to save more and thus be more prepared for any future financial outlays or concerns.

They now allow an individual to invest up to £7,000 and receive 100% any gains. It is a sort of tax haven that you can use to for both cash savings and share investment - but only in certain strict proportions.

There are two forms of ISA; the Maxi ISA and the Mini ISA and the difference is really quite simple.

A Maxi ISA is where you can invest in stocks and cash with just one account and with a single company. Here you can invest up to £7,000 with a maximum of £3,000 being in cash form.

You can invest the full £7,000 in stocks and shares with a Maxi ISA should you wish to do so.

A Mini ISA comes in two guises; a Mini Cash ISA and a stocks and shares Mini ISA. If a Maxi ISA is not for you then you have the opportunity to open two Mini ISAs, one for cash which is limited to £3,000 and one for stocks and shares which has a limit of £4,000 and these can be with different companies. You can choose to open one or the other or both depending on what sort of investment you wish to make.