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Life Assurance component Ј1,000 Total Ј7,000

Thus the total amount for all 3 components of the mini ISA's (allowed per person in any one tax year) is Ј7,000. ISA's - The Basics.

Since their introduction in April 1999, ISA's - Individual Savings Accounts - have become extremely popular because they are one of the most tax efficient investment products widely available to investors.

ISA's are a special Government approved tax shelter for personal savings and investments. An ISA is a tax efficient "wrapper" containing different kinds of qualifying investments, in just the same way as PEP's contain various types of qualifying stocks and shares, unit trusts and investment trusts. As with PEPs, the proceeds will be free of both income tax and capital gains tax, however, from 2004 ISA's will cease to be able to recover tax deducted from UK dividend income.

All ISA's are set up according to strict rules laid down by the Inland Revenue. These rules state, broadly, that ISA's can be made up of the following 3 components: Cash, Stocks and shares, and Life Assurance.

• Cash. The cash component may include bank or building society accounts and national savings products.
• Stocks and Shares. The stocks and shares component may include unit trusts, investment trusts, OIEC's, company shares, gilts and corporate bonds.

Life Assurance.

• The life assurance component covers certain types of life assurance products and permits with profits investments.
• You can contribute with a single or regular premium, although with the latter there is no contractual commitment to continue payments.