ISA guide

What is an ISA?
ISA stands for Individual Savings Account.

There are two types of ISA:
  • Cash ISA – essentially the same as a normal savings account except the interest is tax-free*. There are many types of cash ISA accounts, such as instant access, notice, or fixed rate
  • Stocks & shares ISA – suitable if you can leave your money alone for at least five years. You can put your money into a range of investments, such as unit trusts, open-ended investment companies (similar to unit trusts) and investment trusts, as well as government and corporate bonds. The value of your investment can go down as well as up.

Why should I have an ISA?
With an ISA you don’t have to pay tax* on the interest you earn. If you pay income tax, a cash ISA would probably be the best home for your first £20,000 of savings.

How much can I save in an ISA?
Each tax year, which runs from 6 April to the following 5 April, there is a limit on how much money you can put into an ISA. This is called your ‘ISA allowance’. For the 2017/18 tax year, your ‘ISA allowance’ is £20,000. You can choose how to divide your annual ISA allowance between cash and stocks & shares ISAs, however you choose.

Can I switch my ISA from one provider to another?
You can transfer money that you have saved in previous tax years and from the current tax year into a new ISA without affecting its tax-free status. You can also switch your ISA from one provider to another, whenever you want.

To make a transfer, you must not close one ISA to open another, as this will affect your tax-free status. The transfer has to be arranged directly between the two ISA providers and you must ask your new ISA provider to organise this for you. Your current ISA provider cannot prevent you transferring, but they may charge you if you do switch. It’s worth noting:
  • You can now transfer from a stocks and shares ISA to a cash ISA
  • You must transfer all of the money in your current tax year's ISA, you can’t leave some in the old account
  • You can, if you wish, also transfer some, or all, of the money you put into this ISA in previous years without affecting your current ISA allowance.

How long will it take to transfer my cash ISA?
The transfer of ISAs from one provider to another should be completed within 15 days (or up to 30 days for a transfer of a stocks and shares ISA to cash ISA).

Can I withdraw money from my cash ISA?

You can put money in and take money out of an ISA whenever you wish (if the terms of your account allow), but try not to dip into your ISA savings unless absolutely necessary. This is because you can only put in an annual total of £20,000 into your ISA, and could potentially lose the tax-free status on it.

View our examples

Example 1

You pay in £4,000 on July 1

On September 30, you withdraw £2,000, leaving a balance of £2,000

In December, you decide to replace the money in your ISA

You will only be allowed to pay in £16,000 as you already paid in £4,000 when you first opened the ISA. Paying more than £16,000 would take you over your annual limit

Example 2

You pay in £20,000 on July 1

On September 30, you withdraw £2,000

Even though you now only have a balance of £18,000 in your current ISA, you are not allowed to reinvest the £2,000 as you have already reached your limit for this year

* Interest will be paid free of UK income tax.  The tax treatment of ISAs may change

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  • Finding the best savings account
    With so many different types of savings accounts, it’s difficult to know the right account for you.

    This will depend on your individual needs and requirements, including how frequently you can put money away and whether you are likely to want access to your savings. Here’s a quick explanation of the main types of savings accounts we provide:

    Cash ISA
    A Cash ISAs is simply a savings accounts where you don’t pay tax on you interest.  Anyone over the age of 16 can put up to a maximum of £15,240 into a Cash ISA during the tax year which starts in April (rate set for 2015/2016). 

    So if you’re looking to house your cash, then a Cash ISA is often the first place to deposit your savings as your interest won’t get taxed.
    However it’s worth noting that while your interest is tax-free the rate you get on ISAs might not always be the best on the market, you might get better rates on regular savings accounts.

    Take a look at our range of ISAs

    Instant access savings accounts
    As the title would suggest, instant access savings accounts allow you to withdraw your money quickly and easily.  You can put money into these accounts when you please, and similarly you can take you money out whenever you choose.  So if you think you may need to withdraw some of your savings then an instant access savings account is ideal.

    Limited access or notice savings accounts
    Instead of having instant access to your savings, with limited access accounts you usually have a set number of withdrawals a year and have to give us notice before withdrawal. This can be 30, 60 or 90 days notice, so these accounts are ideal if you can plan when you will need your money If you do make an emergency withdrawal from a notice savings account, you’re likely to lose some interest.

    Fixed rate savings accounts
    If you can afford to lock your cash away for a set period of time then a fixed-rate savings account can offers you better return on your money. Fixed-rate accounts will often pay higher interest rates, increasing the longer the term. The interest rate is fixed at the time you open your account, so you have a guaranteed return. But you can’t usually access your cash during this time, and if you do the penalties can be high.

    Note: There’s no guarantee that the current difference between our fixed-rates and general rates will continue. General interest rates may fall below or rise above the fixed-rate.

    Regular savings accounts
    This savings account is for those who can regularly put away cash on a monthly basis. The maximum amount you can save each month varies from £100 to £500 and withdrawals may be limited, but as a result regular savings accounts may provide higher interest rates.
    While regular savings accounts may offer impressive rates, it’s important to remember that because your money will be building up gradually, your overall return might be more modest. This means that if you have a large amount of money to put away a regular savings account might not be the best choice for you. 

    Children’s savings accounts
    Children’s savings accounts are a great way of encouraging young ones to save from an early age or for parents, grandparents, guardians or friends to save for their future.  With our Robin Hood Young Saver account, children can get a series of moneyboxes as they save more, as well as a goodie bag full of items to help them track their savings.