As it is approaching the end of the tax year many people are thinking about whether they can afford to top up their ISA with the maximum amount that they are allowed to pay into it for the tax year. ISAs are split between two types – cash ISAs and equity ISAs. ISAs are a simple means of saving without paying tax.

The limits for each type of ISA for the tax year 2011-12 are as follows:

Overall ISA Limit: £10,680

Cash Limit: £5,340 – the cash limit is included in the overall limit. So you can have a maximum of £5,340 in a cash ISA but if you want to you can have the whole of your allowance in an equity ISA.

Although ISAs may sound complicated they are not. In particular a cash ISA is as simple as a building society savings account. The only complexity is that you have a limit on how much you can pay in. Any interest that you earn in a cash ISA is not subject to tax so if you have any cash savings, then you might as well put them in an ISA and you will immediately save money*

Equity ISAs may be a little more complicated if you are not used to dealing in, or choosing, investments in shares. There are many reasonably simple ISA Equity plans available to you and your financial adviser can explain how to choose the right investments.

*This is a simplification as of course you need to take into account other factors such as what kind of access you need to your money and how long you can leave it invested etc.