Did you know that Individual Savings Accounts (ISAs) allow savers to annually deposit up to £20,000 (a limit set by the government each year) without paying any tax on the interest earned? If you have never had an ISA before, it can be easy to get confused.
Here are 4 common myths you might have heard about ISAs...
You need a hefty sum to open an ISA
You don’t need a lump sum to open an ISA account - our Easy Access Cash ISA can be opened with just £50. ISAs can be good way to get into the saving habit because you can add to them whenever you like, provided you don’t exceed the £20,000 annual limit.
You have to lock your money away for an extended period
Some savers avoid ISAs because they think they’ll have no access to their money. We know how important immediate access to your savings can be, particularly amid the current cost of living crisis, but that doesn't mean you can't reap the tax-free rewards. With our Easy Access Cash ISA, you can withdraw money without any notice period or penalty.
You can’t replace funds you’ve withdrawn from an ISA
You might have heard people describing ISAs as being ‘inflexible,’ in that you can’t replace money that you have withdrawn. However, in 2016, the government changed rules to allow providers to offer more flexibility.
This change was optional, so not all providers chose to adjust. However, our Easy Access Cash ISA and Notice Cash ISA are fully flexible, which means you can replace withdrawn funds without affecting your annual allowance - you can do this as often as you like so long as you don't go over the annual limit (currently £20,000).
You can’t move ISAs to other providers without losing the tax-free status
You can have more than one ISA (although you can only pay into one per fiscal year), but previous ISAs you may have could be earning a low rate of interest. This is where ISA transfers come in – accounts can be moved from one provider to another, which means your money will be retained in an ISA and remain tax-free. Both our Easy Access and Notice Cash ISAs accept transfers in from other providers, so now is a great time to review rates on your old accounts. Transferring your ISA does not count toward your existing year's allowance.
Don’t forget! Your ISA allowance can’t be 'rolled over' from one year to the next, so if you don't use it by 5 April 2023, it'll be gone. For more information on our savings accounts, pop into your local branch, call 01635 555700, or visit our savings webpage.