ISAs explained

We’ve been helping people make the most of their savings since 1853, which includes 20 years of helping with ISAs. We’ve answered some of your most commonly asked ISA questions here, but if you’d like to know more, you can speak to our ISA specialists in-branch too.

You can also explore our ISA range or find out how to transfer your ISA.

What's an ISA allowance?

Each tax year (6 April to 5 April) the government sets a maximum amount of money you can save in an ISA. This is your annual ISA allowance. The ISA allowance for the 2019/20 tax year is £20,000 a year.

How much money can I put into ISAs?

You can split your £20,000 ISA allowance however you like between a Cash ISA, a Stocks and Shares ISA, an Innovative Finance ISA and a Lifetime ISA (if you are eligible. Maximum subscription £4,000 per year in the 2018/19 and 2019/20 tax years), as long as you don’t subscribe to more than one of each type in the same tax year and don’t go over the maximum overall limit.

Is it still worth having an ISA?

There are limits on how much interest you can earn in a standard savings account before you have to pay tax. This is known as your Personal Savings Allowance (PSA). For basic rate tax payers the PSA is £1,000, for higher tax payers its £500, while additional tax payers have no PSA.

When the government introduced the PSA in 2016, it raised the question – are ISAs still worthwhile? The answer to that really depends on your personal circumstances.

  • An ISA offers a tax-efficient way of saving because you don’t pay any income tax on the interest you earn, regardless of how much you’ve saved in ISAs over the years. But if your money isn’t held in an ISA and you exceed your PSA, you’ll pay tax.
  • Your ISA allowance can be passed on to your spouse or civil partner after you die as an additional tax-free allowance.
  • Interest rate increases or having more money to save at a later date could leave you vulnerable to exceeding your annual PSA.
  • If you’re an additional-rate taxpayer and not eligible for a PSA, ISAs will continue to give you a great way of earning tax-free interest on savings.
  • The table below shows how much you could hold in a savings account that isn’t an ISA, before having to pay tax on the interest.

  Basic rate taxpayer Higher rate tax payer
Personal Savings Allowance £1,000 £500
Amount saved before paying tax on interest earned £66,666 £33,333

See the HMRC Guidance on PSA for more information.

Can I have more than one Cash ISA?

You can only pay in new funds or subscribe to one Cash ISA in the same tax year. If you've already got one from a previous tax year, you might be able to pay your new allowance into it if your account allows it. If it doesn't, you'll need to open a new ISA. You can also transfer your Cash ISA to another provider in the same tax year you open and pay in, as long as your account allows it and you transfer the full amount you paid in during that tax year.

Can I open an ISA as a joint account?

No - an ISA is an individual savings account so cannot be opened jointly.

What happens if someone who has an ISA passes away?

If an ISA customer passed away before 6 April 2018, their ISA will revert to a non-ISA easy access account from the date of death.

ISAs held by customers who passed away on or after 6 April 2018 may remain tax-free for a period of time. See Additional Permitted Subscriptions (APS) page for details.

Husbands, wives and civil partners can inherit their loved one’s ISA allowance through Additional Permitted Subscription (APS). If your spouse/civil partner had an ISA and passed away on or after 3 December 2014, APS can increase your ISA allowance. Even if they left the funds in their ISA to someone else, you’ll still inherit the ISA allowance they’ve built up over the years, which can be transferred to you as an Additional Permitted Subscription allowance.

Find out more about our Legacy Cash ISA here.

Can I withdraw money from my ISA?

If your Skipton Cash ISA is flexible you can withdraw money whenever you like and, as long as you replace the money in the same tax year and your account remains open, your annual ISA allowance won’t be affected. If you close a Skipton Fixed Rate ISA during the fixed term, a penalty will apply and you may get back less than you put in.

How do I know if my Skipton Cash ISA is flexible?

We will tell you when you open an ISA if it is flexible. Find out more about flexible ISAs here.

Can I make regular payments into an ISA?

Yes – you can make regular payments from a bank account into a Skipton variable rate Cash ISA or Cash Lifetime ISA if your account allows it, or you can pay in at your local branch. For Skipton Fixed Rate Cash ISAs, you can only pay in funds for seven days after account opening, after this your account maybe closed to further deposits at any time and without notice. These type of accounts are not designed for regular payments.

Can I carry this year's ISA allowance over to next year if I don't use it?

No – you have to use your ISA allowance in the relevant tax year. Any unused ISA allowance cannot be carried over into the next tax year.

What is a Stocks & Shares ISA?

A Stocks & Shares ISA could be an option if you’re looking for a better return on your money and are able to commit your savings for at least five years. Stocks & Shares ISAs aren’t like bank and building society savings accounts as your capital is at risk and you may get back less than you invested. We have financial advisers available in every branch ready to help you find a solution that suits your circumstances and attitude to risk.

What are Innovative Finance ISAs?

The Innovative Finance ISA enables you to lend money through peer-to-peer lending platforms in a tax-free way. The benefit is that the interest rates on offer to peer-to-peer lenders tend to be greater than those currently available from Cash ISAs. However, the risk is also considerably higher, as your capital is not guaranteed and you may get back less than you invested. Skipton Building Society does not offer Innovative Finance ISAs.

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ISA transfer

Use our helpful guide to see how easy it is to transfer your ISA.

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