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Guide to ISAs
ISAs can be confusing. Use our guide to ISAs to find out how ISAs work.
What is an ISA?
- An Individual Savings Account is an account that allows you to save and invest tax efficiently.
- There are four types of ISA: cash ISA, a stocks and shares ISA, a Lifetime ISA, an innovative finance ISA.
- You can contribute to all of the four types of ISA in lots of combinations, You just need to make sure the annual ISA limit, currently £20,000, is not exceeded.
- Cash ISAs are open to 18 year olds and over, you must be a resident in the UK for tax purposes.
The ISA allowance
- The ISA allowance is currently £20,000. This gets reviewed at the start of every new tax year by the government.
- You can pay into more than one cash ISA or stocks and shares ISA subject to the annual limit.
- You can invest in any of the following each tax year as long as your contributions across the four types of ISA do not exceed £20,000
- Cash ISA up to £20,000 (including existing Help to Buy: ISA contributions of up to £200 per month)
- Stocks and shares ISA up to £20,000
- Innovative finance ISA up to £20,000
- Lifetime ISA up to £4,000
Transferring to one of our ISAs is simple, find out how to transfer your cash ISA or stocks and shares ISA
- Some ISAs can be flexible, this means any withdrawals that are made can be paid back in to the account in the same tax year without affecting your ISA allowance. This only applies to our easy access cash ISA.
Tax treatment depends on your individual circumstances and may change. If you're unsure about investing, please seek independent advice.
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.
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Interest received from cash ISAs is not impacted by UK tax. Any potential money you earn from a stocks and shares ISA, innovative finance ISA or Lifetime ISA is unaffected by Income or Capital Gains tax.
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You must be 18 or over and a UK resident for tax purposes to open an ISA. Crown employees living abroad (such as diplomats and members of the armed forces) can also apply.
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You can replace funds within an easy-access cash ISA, you need to ensure you pay the money back in to the ISA during the same tax year that it was withdrawn. You cannot do this with our stock and shares ISAs.
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Cash ISAs are savings accounts that do not apply any income tax on the interest you earn, they offer the same security as any other savings account. Stocks and shares ISAs are designed for people looking to invest for between 5 to 10 years, or longer. They allow you to invest and protect any potential profit and income from Capital Gains and Income Tax. You must remember that with stock and shares ISAs, the value of your investment can go down as well as up and you may get back less than you originally invested.
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Help to Buy: ISA applications are no longer available. You can continue to save up to £200 a month and claim the government bonus with any existing Help to Buy: ISA, subject to your eligibility. We are still accepting transfers of Help to Buy: ISAs from other providers. Find out more about transferring your Help to Buy: ISA.
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We’ll set your Help to Buy: ISA back up with the savings you had in at the point you claimed the bonus, but you'll need to visit your local branch to start the process. The bonus will return to the scheme administrator but can be claimed again when you find another home.
You will need to visit branch within 12 months of closing your Help to Buy: ISA
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At Bank of Scotland, we won’t charge you for transferring a cash ISA, nor do we charge for transferring stock from a stocks and shares ISA out to another provider. Bank of Scotland will charge the remaining administration fee when transferring a stocks and shares ISA to a different provider. In addition if you are transferring to Bank of Scotland your current provider may charge you. Find our ISA Transfers page.
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Cash ISAs can be opened from £1. You may need a higher amount to open a stocks and shares ISA.
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The tax year runs from April 6 in one year to April 5 in the following year.
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Variable rate ISAs offer a rate of interest which can increase or decrease over time. With a fixed rate ISA the interest rate you will receive over the selected term is guaranteed.
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No, the choice is yours. You can have access to money in the account if you open a variable rate cash ISA. Fixed rate ISAs may provide a higher rate of interest but your savings will be locked away for 2 years or more (withdrawal charges apply). A stocks and shares ISA gives you access to your money at any time, but they may only be a more appropriate option for those seeking to invest for a period of 5 to 10 years.
Bank of Scotland plc, Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628.
Eligible deposits with us are protected by the Financial Services Compensation Scheme (FSCS). For further information about the compensation provided by the FSCS, refer to the FSCS website at www.fscs.org.uk/. You can also visit our Financial Services Compensation Scheme page for more details.
