Individual Savings Account
In British deposit terminology, the term Individual Savings Account refers to an investment product available to residents of the United Kingdom. The Individual Savings Account combines investment and savings, and such accounts are currently given favorable U.K. tax treatment by HM Revenue and Customs (formerly Inland Revenue).
For example, an Individual Savings Account in the U.K. will typically consist of two separate components, with one portion being for cash and one being for investments such as stocks and bonds. The cash component operates much like a regular savings account, with the key distinction of interest gains being tax free. The stocks and shares component usually invests in high quality stocks and government bonds. The Individual Savings Account was first introduced in the United Kingdom in 1999, and it originally had three principal types of accounts: Mini, Maxi and a Tax Exempt Special Savings Account or TESSA-Only ISA that is also commonly referred to as a TOISA. Because of the stocks and shares component of Individual Savings Accounts in Britain, a wide range of risk profiles and potential returns are available to holders of such accounts.