A reader from London is unsure about her ISA.

Andy McKechnie, head of sales and marketing for savings at Halifax, tackles the problem.

Clare from London:

What is an ISA and how much can I save each year?

Andy replies:

This is a good question, as there are a lot of people out there who are still unsure what ISA’s are.

ISA’s, or Individual Savings Account’s, are a type of account that help you save tax free. This basically means you receive interest on your savings without losing anything to tax.

They were first introduced by the government in 1999 to encourage people to save. You can save up to £3,600 in a cash ISA each tax year. This runs from 6th April one year to 5th April the following year.

It’s worth remembering that if you have already saved the maximum amount of £3,600 and then you make a withdrawal, you cannot then replace the amount withdrawn within that tax year. For example, if you pay £3,600 into a cash ISA and withdraw £500, you cannot then top your ISA back up to £3,600 in the same tax year.

If you have a question for Andy, go to the myfinances.co.uk Ask the Savings Expert section.

For more information on your savings options go to savings at Halifax