What is an ISA?
Key details:
- An Individual Savings Account helps you to save and invest tax efficiently.
- There are four different kinds of ISA: a cash ISA, a stocks and shares ISA, a Lifetime ISA, an innovative finance ISA.
- You can contribute to the four types of ISA in lots of combinations, as long as you do not exceed the annual ISA limit, currently £20,000.
- To apply for a cash ISA you must be at least 16 and a resident in the UK for tax purposes. For a stocks and shares, lifetime or innovative finance ISA you need to be 18.
The ISA Allowance
- Each tax year (6th April one year to 5th April the following year) the government sets a limit on the amount you can save in an ISA, currently this limit is £20,000.
- You can invest in one of each of the below ISAs per tax year (this includes ISAs held outside Lloyds Bank) as long as your total contributions across all four do not exceed £20,000
- Cash ISA up to £20,000 (This includes 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.
It is easy to transfer a cash ISA or stocks and shares ISA to us.
- Some ISAs are flexible and allow you to make withdrawals and later pay back in to the account during the same tax year and not affect 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, seek independent advice.
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The interest on cash ISAs is free from UK tax. This means that, while some of your interest in other savings accounts may be subject to income tax, you don't pay any income tax on cash ISA interest. You do not pay any additional personal income tax or capital gains tax (where applicable) on any potential money you earn from a stocks and shares ISA, innovative finance ISA or Lifetime ISA.
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You need to be 16 or over to apply for a cash ISA, and 18 or over to apply for a stocks and shares ISA, innovative finance ISA or Lifetime ISA – and a UK resident for tax purposes in all of these cases. 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You can replace funds within a cash ISA, as long as you replace it in the tax year that it was withdrawn. You cannot do this with a stock and shares ISA, any money any added to your stocks and shares ISA will reduce your remaining ISA allowance even if the same amount of funds were withdrawn previously in the tax year.
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Cash ISAs let you save without having to pay any income tax on the interest you earn. Your money is at no more risk than any other savings account. Stocks and Shares ISAs are an option if you're looking to invest for at least 5 to 10 years. They let you save without paying Capital Gains Tax on any potential profit you make, plus there is no further tax to pay on any income you receive from your investments. 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.
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You can no longer apply for a Help to Buy: ISA. If you already have one you can still save up to £200 a month by standing order and claim the government bonus, subject to your eligibility. If you want to, you can transfer it to another provide. 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.
If your house sale has fallen through due to Covid-19 (up to 30 June 2020) you will have 15 months (rather than the normal 12) to reinstate your Help to Buy: ISA from the date you first closed the account and your conveyancer should give you a Purchase Failure Notice stating 15 months.
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Lloyds Bank won’t charge you for transferring your cash ISA, or stock from your Share Dealing ISA to another provider. Please note we do charge the outstanding administration fee when transferring a Share Dealing ISA. In addition you need to be aware your current provider may charge you for transferring to one of our ISAs. You can often transfer your ISA between different providers – you will need to ask your new ISA provider to arrange the transfer for you. Find our ISA Transfers page here.
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No. You can open a cash ISAs from as little as £1. You may need a higher amount to open a stocks and shares ISA depending on the account you open.
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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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A variable rate ISA offers you a rate of interest which can go up and down. With a fixed rate ISA you know in advance what your interest rate will be over your selected fixed term.
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It’s up to you. Variable rate cash ISAs offer savers instant access to their money. Fixed rate ISAs normally offer savers a higher rate of interest if you can lock your savings away for 2 years or more (withdrawal charges will apply). Stocks and shares ISAs allow you to have access to your money at any time but they may be more appropriate if you are looking to invest for a period of 5 to 10 years.
Important legal information
Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.
Eligible deposits with us are protected by the Financial Services Compensation Scheme (FSCS). We are covered by the Financial Ombudsman Service (FOS).
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