Available since 1999, ISAs have saved Britons millions of pounds. In fact, 20 million people in the UK have ISAs, with a grand total of £300 billion in their accounts. Effectively just a box you can put around a part of your money to stop the taxman getting at it, ISAs are relatively simple too. The 2010-11 tax year ISA allowance is £10,200. This includes both the cash and the stocks and shares components. Your cash ISA account can make up a maximum of £5,100 of the limit, while investments in shares can reach the £10,200 limit entirely. As with any financial product, there are many ways that you can improve the returns from your investments as well as your efficiency in dealing with them. In this article, we have six tips for finding the best ISAs and making the most of them.

1. Get an ISA. It may seem like common sense to put your money where the taxman can’t get at it, but many people fail to do so. Don’t be one of them! What purpose you have in mind for your money can affect many of your decisions when shopping around for the best ISA. Here are some plans you might have for the money:

A store of spare cash for emergencies

A package for your retirement

A form of life assurance

A way to pay for future holidays, avoiding unnecessary debt

To cover the ever-increasing fees of higher education

Whatever your ideas, put away your cash as soon as possible to take advantage of the effects of compound interest and save on your tax bill.

2. Choose wisely. With ISAs, there are many choices to make. The first is how to divide your allowance between the cash and stocks and shares components. Cash accounts carry little risk and some have a fixed rate of return, but the current market makes these somewhat unattractive to many. Stocks and shares ISAs, on the other hand, provide many options for higher returns, but also for volatility. Make sure you thoroughly understand where you are putting your money.

Further to the division of your allowance, you also need to decide the other details. What features should your cash ISA have? What sort of investment vehicle are you planning to use? Questions like these will help you determine what you are looking for, helping you stay on track when it comes to choosing between the various options.

Effective choices when you first invest can quickly become poor ones if you fail to monitor what is happening with your funds. Take charge of your ISA accounts and review the performance, fees and allocation to make sure they continue to fit your needs.

3. Shop around. Once you’ve decided to put your money into an ISA and how you will distribute it, you need to decide who you’re going to do it with. You could go to a high street bank, which would give you a selection of products to choose from. Alternatively, you could use the Internet to find the best ISA for you. Almost everything these days seem to be on an online comparison site. It will come as little surprise to anyone that you are able to compare ISAs, too. If you’re planning to choose your ISA account yourself, this is a very good place to start your search.

Another option is to use an investment specialist to help you make the most of your money. They can provide advice as well as doing the admin associated with investment. Of course this isn’t free, but if you’re a novice investor it can improve the return you get from your money. Even if you’re more experienced, the peace of mind and convenience can be worth the extra cost.

4. Watch those withdrawals. Your ISA account protects your investments from tax, but with the caveat that you can’t make withdrawals. While most ISAs do not need to be held for a certain period of time to be considered tax free, if you take money out of your account you lose that part of your ISA allowance until the end of the financial year. Therefore, it should be the last place you look when you need cash; use your taxable accounts first.

To avoid losing your allowance in the manner described above, use internal procedures when transferring between different providers. Ask for a transfer form from the provider you are moving to. This will simplify things for you at the same time as ensuring that you maintain your tax-free rights.

5. Play the field. As alluded to in the previous tip, one of the most important things to note about ISAs is that you are allowed to switch between providers. If you find a better deal and you are not locked in to your current one, switch away! It is important, therefore, to keep an eye on the ISA market; especially around the beginning and end of the tax year.

If, when switching, the process takes more than 30 days, you have the right to complain under ISA regulations. This should get you compensation for at least the lost interest on your investment, if not the terrible service.

While switching is always allowed, there are different rules about splitting and converting your investments. The current year’s investments cannot be split, but past ones can. Furthermore, cash ISAs can be converted into stocks and share ISAs, but not vice-versa.

6. Time is running out. Your ISA allowance renews every year, but there is no rollover; once a year has ended, that’s it. The last day for opening an ISA is April 5th, but providers may not accept applications until that day. Some providers insist on having paper applications by April 2nd, while others will allow you to apply online right up to midnight on April 4th. Time is always running out to use your allowance!

Opening an account at the beginning of the tax year, rather than waiting until the end as you might expect to do, can save you money because you benefit from an extra year of tax-free interest. Watch out though, as the good deals available around April quickly disappear until the tax year ends, so get in there quickly.