ISAs are savings and investment products where you don’t pay income tax on the interest you earn (or on the increase in value of your investment).
Bank of Scotland offer three types of ISA:
Cash ISAs where you either havea) easy access with no charge for withdrawals but the interest rate is variable, so it could go up and down
First time buyers can choose to save up to £200 a month in a Help to Buy: ISA instead.
To get the best use 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 2017/18 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 Withdrawn funds can be replaced within the same tax year under the Flexible ISA rules, providing you don’t exceed the overall limit of £20,000 by the end of the tax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.
The Help to Buy: ISA allowance is lower than the overall ISA allowance. You can only pay into one cash ISA per tax year, so any remaining allowance can only be invested in a stocks and shares ISA and/or a lifetime ISA (up to the lifetime ISA limit) and/or an innovative finance ISA.
Here are some examples of how it could work:
|Cash ISA||Stocks and Shares ISA||Total ISA Allowance|
You can only open and pay money into one cash ISA and/or one stocks & shares and/or a one lifetime ISA and/or one innovative finance ISA each tax year.
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.