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All about ISAs
An ISA is an Individual Savings Account. It’s a tax-efficient way to save and invest your money.
What you need to know
- There are four types of ISA: cash ISAs, lifetime ISAs, stocks and shares ISAs, and innovative finance ISAs.
- All four ISA types help you save and invest tax efficiently.
- The annual ISA allowance currently lets you save and/or invest up to £20,000 in your ISA – or you can spread that allowance across multiple types of ISAs.
- For tax reasons, you need to be 18 or over and a UK resident to apply for an ISA.
ISA allowance?
Each tax year, the Government decides the maximum you can save into your ISA or ISAs. (The tax year runs from 06 April to 05 April the year after.) Right now, the ISA allowance is £20,000. You can hold different types of ISAs at the same time and pay into more than one (so long as you don’t exceed £20,000 overall) – but each ISA type has its own maximum limit.
Maximum limit per ISA type:
- Cash ISA: £20,000
- Stocks and shares ISA: £20,000
- Innovative finance ISA: £20,000
- Lifetime ISA: £4,000
So you could split up your £20,000 allowance like this:
You can have multiple ISAs of each type with us, except for cash ISAs. You can only pay into one Bank of Scotland cash ISA per tax year.
What do ISAs have to do with tax?
There are several types of tax that can impact your returns from investments or interest earned on savings. ISAs can help you make sure you’re not missing out on any tax efficiencies.
We have resources to help you understand what tax you might owe, and how an ISA could help.
Why does the tax-year end matter?
The end of the tax year on 05 April is like a reset. On 06 April, most of your tax allowances (including your ISA allowance) restart for the new tax year, so you can save up to the maximum again.
But while your unused pension allowance can be rolled forward to the next three tax years, your ISA allowance doesn’t. If you don’t save the full £20,000 in one tax year, you can’t save more the next. So to make the most of the tax benefits, you need to maximise your allowance each year.
Your tax treatment depends on your personal circumstances, and it can change. If you want guidance on investing, you can look for independent advice. Be aware that most advisors will charge you a fee.
A look at the details
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UK residents aged 18 or over can apply for a cash ISA and/or a stocks and shares ISA. If you’re a Crown employee who lives overseas (like a soldier or a diplomat), you can also apply.
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At the moment, if you go over the £20,000 annual ISA allowance you’ll need to get in touch with your ISA provider(s). They’ll work with HMRC to fix the issue for you.
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Yes. You might have to pay a fee, depending on the providers. We don’t charge you anything to transfer.
If you’d like to make a transfer, choose one of these options:
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The answer’s yes, but only for some of our ISA accounts.
You can replace funds in a flexible cash ISA, but you need to do it in the same tax year in which you took the money out. You can’t withdraw and replace funds with fixed-rate cash ISAs.
With a stocks and shares ISA, it’s different. No matter how much money you take out, any new funds you add count against your remaining ISA allowance.
If you want full flexibility, try our investment ISA. As long as you do it in the same tax year, you can withdraw and add funds as often as you like.
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For our variable rate cash ISAs and stocks and shares ISAs, you need just £1 to get started. Then you can add funds later, when you’re ready.
But for an investment ISA, you’ll need a £500 lump sum or to set up a £50 monthly direct debit to get you going.
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With a variable rate ISA, your interest rate can rise and fall. With a fixed-rate ISA, your interest rate stays the same for the duration of your fixed term.
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If you want to. If you think you’ll want instant access to your money, a cash ISA might be the best choice. But ISAs that require you to leave your money for a set amount of time, like a fixed-rate ISA, will often offer a better interest rate. You can still get your money out if you need it, but you’ll be charged.
Stocks and shares ISAs and investment ISAs let you take money out whenever you like, but you’ll get the best return on them by leaving them for 5 to 10 years minimum.
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A few reasons:
- You’ve already used up your £20,000 ISA allowance.
- You’re already investing your spare money tax-efficiently, for example into a pension.
- You’re not able to open an ISA if you’re not yet 18, or not a UK resident.
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Some are. Our easy access cash ISAs and our investment ISA let you take funds out and replace them later (so long as it’s within the same tax year), without it affecting your ISA allowance.
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Save or invest
Discover our ISA options and choose the one that’s right for you.
Personal Savings Allowance
Find out how your Personal Savings Allowance (PSA) affects the tax you pay on savings and investments.
Manage your ISAs
Manage your Bank of Scotland cash ISAs here. Renew, transfer or compare.
Important legal information
Bank of Scotland Share Dealing Service is operated by Halifax Share Dealing Limited. Registered in England and Wales No. 3195646. Registered Office: Trinity Road, Halifax, West Yorkshire HX1 2RG. Authorised and regulated by the Financial Conduct Authority under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.
Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628.