An ISA (Individual Savings Account) lets you save and invest without paying income tax on the interest you earn.
This makes it a tax-efficient way to save or invest. You can put up to £20,000 in an ISA in the current tax year. Your £20,000 allowance can be spread across a range of ISAs but keep in mind; you can only make contributions into one cash ISA in a tax year. This includes Help to Buy: ISAs and cash ISAs held outside Bank of Scotland.
Bank of Scotland offers a flexible range of ISAs:
a) easy access to your money with no charge for withdrawals. The interest rate is variable, so it could go up and down.
b) a fixed rate of interest but no withdrawals allowed. You can close a fixed account early or transfer your money to another ISA, but you will be charged the equivalent of 180 days’ tax-free interest.
To get the best out of your ISA you should use your maximum annual allowance and do this as early as possible during the tax year – which runs from 6th April one year to 5th April the next year.
The total amount you can save in ISAs in the current tax year is £20,000. You can choose to use your ISA allowance in a cash ISA, a stocks and shares ISA, an innovative finance ISA, a lifetime ISA (depending on your age and circumstance and up to the lifetime ISA limit) or any combination of the four as long as you don't exceed the annual allowance. Withdrawn funds can be replaced within the same tax year under the Flexible ISA rules, providing you don’t exceed the overall limit of £20,000 by the end of the tax year.
Keep in mind; you can only open and pay money into one cash ISA in each tax year. This includes Help to Buy: ISAs and any cash ISAs held outside Bank of Scotland.
Here are some examples of how it could work:
|Cash ISA||Stocks and Shares ISA||Total ISA Allowance|
How the ISA allowance works
Flexible ISA rules allow you to withdraw and replace funds from certain types of our cash ISAs without affecting your yearly ISA allowance, providing you replace funds in the same tax year you withdraw them, for example:
You can't carry any unused amount over to a new tax year – the ISA allowance simply resets back to the annual allowance again on 6th April.
Tax treatment depends on your individual circumstances and may change.
If you still have questions about ISAs we have put together a list of some of the most frequently asked questions to help you.