With a new tax year approaching fast, how many Britons really know what an ISA is?

Individual Savings Accounts were introduced back in April 1999 replacing old style Personals Equity Plans (PEPs) and Tax Exempt Special Savings Accounts (TESSAs)

Basically an ISA is a tax free savings account in which you can have cash or shares. According to a Royal Bank of Scotland survey, 36 per cent of Britons have cash ISAs but would be savers are still confused by the product.

More worrying is the survey result that found that 24 per cent of those Britons who do have an ISA don’t fully understand how the product works.

This isn’t necessarily the incompetence of the client. It really does state the quality of advice given on such a basic plan and perhaps this is reflected in the recent £7.7 million fine handed out to Barclays for investment advice failings.

Cash and Investment ISAs are a basic financial planning tool that should be utilised by investors wishing to save over the short, medium or long term and each have their own unique features.

You are able to invest a total of £10,200 into ISAs for the current tax year. Up to a maximum of £5,100 can be invested into cash ISAs and the remaining balance left can be used for your investment ISA.

Alternatively investors looking over the medium term (minimum of five years) are able to fund your Investment ISA with a maximum amount of £10,200.

That gives you the opportunity to invest in many different asset classes and worldwide funds via many different fund managers.