In partnership with the Financial Services National College (FSNC).
What is a Cash ISA and how much can you deposit?
Here’s everything you need to know about these tax-free savings accounts.
Back-to-basics Cash ISA guide
What is a Cash ISA?
Introduced in 1999 to encourage people to save, an Individual Savings Account – ISA for short – works in much of the same way as an ordinary savings account, except you do not pay tax on the interest you earn.
There are four core ISA types – Cash ISA, Stocks & Shares ISA, Innovative Finance ISA and a Lifetime ISA. Newbury Building Society only offers a Cash ISA.
What are the limits and allowances of a Cash ISA?
Every UK adult gets an ISA allowance of £20,000 per tax year (which started 6 April). You can only pay in new funds or subscribe to one Cash ISA in the same tax year.
Once the new tax year kicks in, you will get a new allowance. However, your unused allowance from the previous tax year will not roll over – so if you don’t use it, you lose it.
The ISA allowance for 2021/22 is £20,000.
What type of Cash ISAs are there?
There are three principle types of Cash ISAs:
- Easy Access Cash ISA: like the ISA account we provide, easy access (sometimes called instant access) allows you to withdraw and replace money from your current and/or previous years’ subscription without it affecting your annual ISA allowance. Replacement funds must be paid into your ISA before 5 April following withdrawal, or it will go towards your annual ISA allowance.
- Regular Savings Cash ISA: you usually pay a fixed rate of interest over a certain time, if you deposit a certain amount of money each month. You can deposit a maximum of £1666 per month to not exceed the £20,000 allowance.
- Fixed-rate Cash ISA: these types of ISAs require a certain level of commitment as you lock your money away for a fixed amount of time. Generally, the longer the fixed-rate term, the more interest you’ll earn.
You can put money into one of each kind of ISA each tax year.
Can funds be transferred between Cash ISAs?
You can transfer your Cash ISA to another provider in the same tax year you open and pay in if your account allows it, and you transfer the full amount you paid in during that tax year.
Regarding our Easy Access Cash ISA, you can transfer in cash and/or stocks & shares from other providers, subject to account balance limits.
Who can open a Cash ISA?
Anyone aged 16 and over can open a Newbury Building Society Easy Access Cash ISA.
Can a joint Cash ISA be opened?
No; an ISA with or on behalf of someone else cannot be held.
What happens to a Cash ISA in the event of your death?
If your Cash ISA is not closed by your executor or the administration of your estate is uncompleted, your account will remain open for three years and one month after your die.
You can find further information on GOV.UK.
Is it possible to inherit a Cash ISA?
Yes; if your spouse or civil partner dies you can inherit their ISA allowance. For further information speak to the financial provider of the Cash ISA.
If you would like to discuss opening an Easy Access Cash ISA with us, you can do so by contacting us online and one of our qualified savings advisers will be in touch.
Please note: our Easy Access Cash ISA is available to those within certain postcodes.
*all figures and data correct as of March 2022