Virgin Bonds and Gilts ISAs - Earn a steady return with low risk to your capital

'ISA' stands for Individual Savings Account. They are the Government's way of encouraging you to save by giving you a tax incentive.

Unlike bank or building society deposit accounts, unit trusts or similar investments, you do not have to pay any additional income or capital gains tax on the money you make.

You can use your ISA to invest in stocks and shares, or simply as a risk-free savings account where your interest is tax-free. Or you can do both. You do not even have to tell the taxman about your ISAs on your annual tax return.

For this tax year your annual savings ISA allowance is £7,200, or £10,200 if you were born on or before 5 April 1960. You can:

• Invest up to £7,200 (£10,200 if you are 50 or over this tax year) all in a Stocks & Shares ISA
• Or invest up to £3,600 (£5,100 if you are 50 or over this tax year) in a Cash ISA with the rest in a Stocks & Shares ISA.

This higher allowance will apply for everyone from 6 April 2010.

ISAs are a great way to make the most of your savings, because of the tax incentives on offer.

At the very least a Cash ISA should give you a better return than you would get from your bank or building society savings account, because your interest comes tax-free.

Also, if you are:

• looking for a potentially higher return than a bank deposit account can offer
• prepared to accept more investment risk and invest for a few years

That is when ISAs like our FTSE All-Share Tracker ISA and Climate Change ISA really come into their own. Over longer time spans few other investments can match the stock market for potential returns. It remains the No.1 place for investors looking to grow their money.

If you are not comfortable at the thought of investing in the stock market, you might want to consider our Bond and Gilt ISA instead. It should give you a higher return than a building society savings account, without significantly increasing your risk.

To see the Simplifed Prospectus for the investment funds in a Virgin ISA click on the link below. (NB. There is no Simplified Prospectus for the cash part of an ISA.)

ISA Simplified Prospectus

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Alternatively, you can call 08456 10 20 20 or email info@virginmoney.com to have a copy of the Simplified Prospectus sent to you.

For this tax year your annual savings ISA allowance is £7,200, or £10,200 if you were born on or before 5 April 1960. You can:

• Invest up to £7,200 (£10,200 if you are 50 or over this tax year) all in a Stocks & Shares ISA
• Or invest up to £3,600 (£5,100 if you are 50 or over this tax year) in a Cash ISA with the rest in a Stocks & Shares ISA.

This higher allowance will apply for everyone from 6 April 2010.

You can also transfer cash ISA investments from this or previous tax years into a Stocks & Shares ISA without affecting your current tax year limit.

Both the FTSE All-Share Tracker ISA and the Bond and Gilt ISA have an annual management charge of 1% a year.

There are no other charges, and no charges at all on our Cash ISA.

The Virgin Climate Change ISA has an annual management fee of 1.75%. There may also be a 20% performance related fee, which we only earn if we outperform agreed benchmarks.

Yes, whether it's an ISA from a previous tax year or one you're paying into this tax year, you can transfer it to Virgin.

If you're interested in transferring an ISA to us, click here or call us on 08456 10 20 20.

Customers growing their savings in our bond and gilt fund since 31 October 1995 have enjoyed an average return of 4.80% a year, turning a £5,000 investment into £9,597.

Source: Morningstar Workstation, 31/10/1995 - 30/09/2009, buying to selling unit prices, basic rate taxpayer.

Source: Morningstar Workstation, year on year 30/06/2004 - 30/09/2009, buying to selling unit prices, basic rate tax with income reinvested

Remember, with bonds and gilts the value of your fund and the interest that gets reinvested can go down as well as up on a daily basis, with no guarantees you'll get back the full amount you invest. To maximise your chances of a good return you should be looking to invest for at least five years.

It's also worth remembering that the past performance of an investment isn't always a guide to how well it may do in the future.