What is an ISA and who can have one?
An ISA is a tax efficient way to save and stands for Individual Savings Account. An ISA lets you pay little or no tax on the interest your savings and investments make.
There are four main types of ISA:
- Cash ISAs – these are simply savings accounts that are tax-free
- Stocks & shares ISAs – these are investments that are classed as tax efficient
- Innovative finance ISAs (from 6th April 2016) – these are peer to peer lending investments that are classed as tax efficient.
- Lifetime ISAs which can be either classed as savings (tax-free) or investments (tax efficient).
Paying money into an ISA:
Paying into an ISA is called subscribing. You can subscribe to one of each type of ISAs each tax year, providing between them you do not subscribe more than your annual ISA allowance. For the 2018/2019 tax year that runs from the 6th April 2018 to 5th April 2019 your annual allowance is £20,000.
Help to Buy: ISA is a type of cash ISA and we allow you to pay into both a Ulster Bank regular cash ISA and a Ulster Bank Help to Buy: ISA during the same tax year, providing between the two you do not exceed your overall annual ISA allowance. You can pay into both, as we count them as one overall cash ISA subscription.
Help to Buy: ISA allows a monthly maximum subscription of £1,200 in the first month and then £200 per month thereafter. Any amount paid into a Help to Buy: ISA counts towards your overall annual ISA allowance.
ISAs are a good idea whatever your savings goal. With certain types of cash ISAs, you have instant access to your money, making it a flexible way to plan your finances.
Having an ISA is also a great way to save tax efficiently as an additional part of your long term financial planning. Stocks and shares ISAs are intended as a medium to long-term investment which means they should be held for at least 5 years.
It’s important to remember that ISA allowance limits apply to everyone on an individual basis, so if you’re married or in a relationship, you can both hold your own ISA, each with the full allowance.
To subscribe to a cash ISA:
- You must be aged 16 or over
- You must be a UK resident for tax purposes
- Have not subscribed to another cash ISA in the same tax year
Our instant access Cash ISA does not offer Flexible ISA functionality, therefore if you withdraw funds from it, you cannot reinvest in the same tax year if your total deposits exceed your annual allowance.
For example :
|Your cash ISA yearly limit||£20,000|
|You pay into your cash ISA||£16,000|
|Your remaining tax-free allowance is||£4,000|
|You then make a withdrawal of||£500|
|Your remaining tax-free allowance is still||£4,000|
|Overall possible saving by end of tax year||£19,500|
Help to Buy: ISAs allow you to deposit up to the monthly allowance.
Choosing an ISA
We offer two types of cash ISAs:
Cash ISA - An instant access variable interest rate account where interest rates can move up or down.
Help to Buy: ISA – UK Government scheme to save towards buying your first home. Save up to £1,200 in the first month and then up to £200 per month thereafter.
What happens in the future to my cash ISA?
Making future subscriptions
You can keep a variable rate cash ISA open year after year, paying into them in subsequent tax-years, up to your yearly allowance. However, if an entire tax-year goes by without a deposit being made into your cash ISA, you cannot make any further payments into it until you have reactivated your account.
How to reactivate a cash ISA
To reactivate your cash ISA to carry on saving into it, you simply need to complete a reactivation form.
Transferring a cash ISA
You can only have one cash ISA per tax year. If you want to move your current or previous cash ISA balances between providers, there’s a transfer process that safeguards your tax-free entitlement. Transfers can take up to 7 working days.
To transfer any existing ISA to us, please view our dedicated ISA transfer page.
Transferring a stocks & shares ISA to a cash ISA
From 1st July 2014, as part of the New ISA changes, you may now transfer from a stocks and shares ISA to a cash ISA.
As with cash ISA transfers if you want to move current or previous tax years balances there’s a transfer process that safeguards your tax efficient entitlement.
Transfers from stocks and shares ISAs to cash ISA take up to 30 calendar days to be completed and your existing stocks and shares ISA provider will sell your investments and send the cash to your new cash ISA provider. Your new cash ISA provider will then apply the cash to your account, keeping it within the ISA wrapper.
What to do next
If you already subscribe to an ISA, you can continue saving in your existing ISA in the new tax year, or you can open a new ISA. You can only subscribe to one cash ISA per tax year. Don’t forget the tax year ends on 5 April – make sure you take advantage of this years’ allowance before it’s too late.
You will normally need the following information when setting up an ISA:
- Your National Insurance number
- One form of evidence of your identity (a current passport, full UK driving licence, a benefit book or a UK armed forces identity card)
- One form of evidence of your address (an original gas, electricity, phone or council tax bill, an original bank or building society statement)
All documents should be the most recent you have, and from within the last six months.
Our ISA guide explains everything you need to know about ISAs and tax-efficient saving.