From today (6 April), anyone that qualifies for an ISA can enjoy an increase of £480 per year to their tax free savings allowance.
Many people may not know it, but any earnings made through interest from standard savings accounts is counted as a form of income, so it qualifies for income tax.
This can be anything from 10% to 50%, which can significantly lower the total returns on your investment.
However, with a tax free ISA savers can benefit not only from tax free interest paid in their savings, but also tax free returns from shares spanning a large number of businesses and companies using an share dealing account or investment ISA.Savers can now put aside up to £10,680 each year into cash and stocks and shares ISAs, allowing them to avoid paying any tax on the returns.
If you leave your savings to grow they will continue to provide a tax free income for as long as they stay put. Some ISAs allow savers to have their interest paid into a separate account so you can leave your original investment to grow while earning an income on the side.