What is a Cash ISA?
Cash ISAs are simply savings accounts that provide you with the added benefit of not paying tax on the interest you earn – meaning you keep more of your money.
There are different types of Cash ISAs for you to consider:
Easy Access Cash ISA
- Great for short-term saving goals or if you need easy access to your money.
- They pay a variable rate of interest.
- With Skipton's Easy Access Cash ISAs you can withdraw money and replace it later without it affecting your annual allowance, as long as it's done in the same tax year and the account remains open.
For example, if you’ve already paid £10,000 into your Easy Access ISA during the current tax year, you can withdraw £5,000 and still pay in another £15,000 before you reach your annual £20,000 limit.
But bear in mind, some Cash ISAs have restrictions on paying in and withdrawing, so please check the terms of the account carefully before applying or making a withdrawal.
Easy Access Cash ISAs
Fixed Rate Cash ISA
- Typically used for for longer-term goals and if you don't need immediate access to your money.
- Tend to receive a higher rate of interest in exchange for committing your money for a fixed period of time, for example, fixed for one, two, or five years.
- There are a variety of different terms you can fix your money for. How long you want to fix for depends on your individual goals.
A Fixed Rate Cash ISA could be ideal for savers who have a lump sum to pay in and don’t need access to their money before the end of the term. Often with these accounts, if you close your account early, you're likely to incur an interest penalty so you may get back less than you paid in. As with Easy Access Cash ISAs, you can pay in up to the annual allowance each tax year, currently £20,000.
Fixed Rate Cash ISAs
Lifetime ISA
Lifetime ISA (LISA) is a type of savings account. It could be suitable if you’re aged between 18 and 39 and saving to buy your first home, towards your retirement, or both.
You can save up to £4,000 in your LISA each tax year. It forms part of your overall £20,000 annual ISA allowance. For example, if you save £4,000 into a LISA, you can save or invest up to £16,000 in other types of ISAs.
You’ll also get a government bonus of 25% on what you pay in, up to £1,000 per tax year. That’s free money to jump start your savings. There are important restrictions on LISAs. You have to be aged between 18 and 39 to open one.
You can withdraw from your LISA after 12 months from your first payment in to buy your first home with a purchase price of up to £450,000.
For any other withdrawals before the age of 60, a 25% government withdrawal charge usually applies. This means you’d get back less than you paid in.
Cash Lifetime ISA
Junior Cash ISA
A Junior Cash ISA is an ISA for young people under the age of 18. Here's what you need to know about Junior Cash ISAs:
- Each tax year you can save up to £9,000 tax-free into a Junior Cash ISA.
- Parents or guardians can open a Junior Cash ISA for a young person at any time. A young person can open their own Junior Cash ISA from the age of 16.
- A child can only access the money when they turn 18; the money held in a Junior ISA then transfers to an Easy Access Cash ISA for adults.
Junior ISAs can be a great way of teaching children the value of saving from a young age. They allow them to watch their savings grow over time and provide them with a financial head start for when they reach adulthood.
Junior Cash ISA
