What is an ISA?
An ISA is an Individual Savings Account and is a great way to save tax-efficiently.
Just like other savings accounts, an ISA is a safe, secure way to save money. The key difference between an ISA and other savings accounts, is that with an ISA you will automatically earn tax-free interest on your savings, for as long as your savings remain within your ISA.
Choosing the cash ISA that is right for you depends on your own individual needs and savings goals - but, at Newcastle Building Society, we’re always here to help you explore your options.
How much can you save in an ISA?
The total amount you can save into a cash ISA is £20,000 each tax year if you are over the age of 18.
You can also save up to £9,000 in a Junior ISA on behalf of a child under the age of 18.
Some types of ISA have specific limits as to how much you can pay in. For example, you can save up to £4,000 in a Lifetime ISA each tax year if you are over the age of 18 and up to the age of 50. You must be under 40 to open a Lifetime ISA. The Lifetime ISA limit of £4,000 counts towards your £20,000 cash ISA limit.
An ISA must be held by an individual and therefore cannot be a joint account with someone else.
You can either save your full allowance in one ISA or you can split your ISA allowance across multiple ISA types, as long as you stay within your ISA allowance limit.
To be eligible to save in an ISA you must be:
- Aged 18 or over,
- A UK resident and,
- Have a National Insurance Number.
What are the benefits of saving in an ISA?
There are a number of benefits to saving in an ISA:
- You will not pay tax on any interest you earn in an ISA, year after year, for as long as the money remains in an ISA.
- Your ISA allowance renews each new tax year – so you can build up your tax-free pot over time.
- For Adult ISAs, you can typically access your ISA funds, depending on the product. However, there are some exceptions to this, such as Junior ISA and Lifetime ISA, please see below for more information.
- The value of your ISAs can be transferred to your spouse or civil partner if you pass away, protecting your tax-free savings.
Can I transfer an ISA?
Yes, you can transfer your existing ISAs between providers as many times as you wish. You can transfer your ISAs from the current and previous tax-years between ISA providers and can consolidate previous tax-years’ ISA subscriptions into one product, where the product allows.
If you wish to transfer an existing ISA held with another provider to a new ISA with Newcastle Building Society, you can do this as part of your application process.
Once we have received your transfer details, we’ll contact your current provider to organise the transfer. If you wish to transfer your ISA between providers, it is important that this is done via an ISA transfer. If you withdraw your money from an ISA to an account that is not an ISA, it will lose its tax-free status.
If you wish to transfer an existing ISA held with Newcastle Building Society to a new ISA held with us, you first need to open a new ISA account. Once you have done this, you can transfer your ISA by logging into your account online.
For more information on transferring an ISA please see our guide to transferring an ISA. Alternatively, you can give us a call on 0345 734 4345 or visit your local branch.
Types of ISAs
There are a number of different ISAs available to help you achieve your savings goals. Whether you’re saving for your first home or saving for a rainy day, there is an option to suit you.
Our cash ISA range includes fixed rate ISAs for savers who don’t need access to their money, and accounts which allow either limited or easy access for those who do.
- Easy access ISAs offer a variable interest rate and easy access to your funds at any time. These accounts are suitable for savers who require access to their funds on a regular basis.
- Limited access ISAs have a variable rate of interest, and you can typically only withdraw funds penalty free a number of times each year depending on the product.
- Notice cash ISAs offer a variable interest rate, and you can access your funds by giving us notice in line with the terms and conditions of the product.
- Fixed rate ISAs offer a fixed interest rate for a fixed term, guaranteeing the interest you will earn. A fixed rate ISA would be suitable for you if you do not need access to your funds until the end of the product term. If you do require access to your funds before maturity, an interest rate penalty will be applicable as set out in the product terms and conditions.
A stocks and shares ISA allows you to invest in a wide range of shares, funds, investment trusts and bonds. Although there is no fixed term, you should consider Stocks and Shares ISAs to be a medium to long term investment of ideally five years or more. If you want to know more about a Stocks and Shares ISA, you can speak to one of our Newcastle Financial Advisers who will be able to help.
A stocks and shares ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
A Lifetime ISA (LISA) is available for 18 to 39 year-olds, who are saving to buy their first home or saving for retirement. A LISA enables you to save up to £4,000 tax-free each year, which is topped up by a government bonus of 25%, up to your 50th birthday.
You can save towards your first home with a Lifetime ISA if you have never owned a home and want to buy your first home in the UK for a purchase price of up to £450,000.
If you are using a Lifetime ISA to save for retirement, you can access the funds after your 60th birthday.
You will only receive the Government’s 25% bonus if you go on to use the savings in your Lifetime ISA towards the deposit on your first home and/or towards your retirement after saving for a minimum of 12 months. If you make a withdrawal not connected to these two events, then a 25% penalty will apply to the amount you withdraw. This will recover the Government’s bonus and you will get back less than you have saved. If you make a withdrawal not connected to these two events, then a 25% penalty will apply to the amount you withdraw. This will recover the Government bonus and you will get back less than you have saved.
Junior ISAs are a tax-efficient way of saving for your children and grandchildren. As a parent or guardian, you can open a junior ISA for your child and save up to £9,000 each tax year.
Please note however, you cannot access the funds saved into a Junior ISA until the child’s 18th birthday.
Explore our range of ISAs
View our full range of ISAs which includes fixed rate ISAs for savers who don’t need fast and easy access to their money, easy access ISAs for those who do, and ISAs designed specifically for first time home buyers.
Popular ISA FAQs
You can save into multiple ISAs in a tax year as long as you remain within your ISA allowance of £20,000.
At Newcastle Building Society we offer the ‘CustomISA’ service which allows you to spread your annual ISA allowance across different types of cash ISAs. Check out our ‘CustomISA’ calculator which will help you compare and adjust the amounts you put into each ISA to help you find the perfect ‘CustomISA’ for you.
The deadline to use your ISA allowance by is the end of the current tax year, which is midnight on 5th April each year.
Any unused allowance does not roll over into the new tax year on 6th April, so you should try to make the most of your allowance before the deadline at the end of the tax-year.
At Newcastle Building Society most of our cash ISAs are ‘flexible ISAs’. With a flexible ISA you can take money out when you need it and then replace it – as long as you do this within the same tax year, and within the annual ISA allowance.
However, if you make a withdrawal from a fixed rate ISA, this will typically be subject to a loss of interest penalty. If you think you will need access to your savings quickly, then you may be better considering an easy access savings account, such as the Newcastle Easy Saver ISA, which allows as many withdrawals as you like, penalty-free.
No, you cannot hold an ISA jointly with, or on behalf of, anyone else.
When you pass away, if you have a spouse or civil partner, they’ll inherit a one-off additional ISA allowance, equal to either the value of your ISA on the day you pass or when it’s closed – whichever value is higher. This allowance is known as the Additional Permitted Subscription (APS) and doesn’t affect your spouse/civil partner’s own ISA allowance.
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ISA FAQs
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The tax information provided is based on the current law and HM Revenue &
Customs practice both of which may change.
Newcastle Building Society introduces to Newcastle Financial Advisers Limited for advice on Investments, Pensions, Life and Protection Insurance and Inheritance Tax Planning. Newcastle Financial Advisers Limited is an appointed representative of The Openwork Partnership which is a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.
Approved by the Openwork Partnership on 17/07/2023.