Guide to ISAs

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 have

    a) easy access with no charge for withdrawals but the interest rate is variable, so it could go up and down
    b) fixed with no withdrawals allowed but can be closed early or transferred to another ISA subject to loss of interest
  • First time buyers can choose to save up to £200 a month in a Help to Buy: ISA instead.

  • Stocks and Shares ISAs are a tax-efficient way of investing if you’re looking to put your money away for the medium to long-term (at least 5 to 10 years). Unlike cash ISAs, the value of your investment can go down as well as up and you may get back less than you originally invested.
  • Junior ISAs are a tax-efficient way to save for your child and can be accessed by the child when they reach 18 years of age. The annual Junior ISA allowance for this tax year is £4,128 and can be invested in a Junior Cash ISA, a Junior Stocks and Shares ISA, or a combination of both, providing you don’t exceed the annual limit.
  • Innovative Finance ISAs are not offered by Bank of Scotland, but are a tax-efficient way of participating in peer to peer lending using your savings without paying any personal tax on the income received. The value of your investment can go down as well as up and you may get back less than you originally invested.
  • Lifetime ISAs The Government introduced lifetime ISAs on 6 April 2017. They allow you to save up to the lifetime ISA allowance each tax year and receive a government bonus of 25% of what you have saved. You can use some or all of the money to buy your first home, or keep it until you're 60 - its up to you. Bank of Scotland doesnt offer this ISA however you are able to transfer in from and out to a lifetie ISA subject to product rules.

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.

What are the ISA rules and limits?

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
£0 £20,000 £20,000
£10,000 £10,000 £20,000
£20,000 £0 £20,000

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:

  • If you pay £10,000 into your cash ISA, you would then have another £10,000 that you could pay in to reach your maximum allowance of £20,000.
  • If you took out £2,000, leaving £8,000 in your ISA, you could put £2,000 back in to your account and still have £10,000 of your allowance remaining for this tax year.
  • The Help to Buy: ISA allowance is lower than the £20,000 cash ISA allowance, as you can only make an initial deposit of £1,000 plus £200 per calendar month. Any remaining ISA allowance can only be invested into a stocks and shares ISA and/or a lifetime ISA (up to the lifetime ISA limit) and/or an innovative finance ISA.

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.

See our range of ISAs

Tax treatment depends on your individual circumstances and may change.

Common enquiries


If you still have questions about ISAs we have put together a list of some of the most frequently asked questions to help you.