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Guide to ISAs

ISA allowances and rules explained

ISAs offer a tax-efficient way to save and invest; find out what they are and how they work.

What is an ISA?

An ISA is an Individual Savings Account – it allows you to save or invest money in a tax-efficient way. An ISA (individual savings account) is a tax-free savings or investment account that allows you to put your ISA allowance to work and maximize the potential returns you make on your money, by shielding it from income tax, tax on dividends and capital gains tax. You need to bear in mind, though, that tax rules can change in future and that their effects on you will depend on your individual circumstances.

There are four main types of ISA to choose from:

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Cash ISAs

A cash-only savings account based on a fixed or variable rate.

This also includes a Help to Buy ISA, supporting first time buyers with a 25% government bonus on amounts saved between £1,600 and £12,000 when savings are used towards buying their first home.

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Investment ISAs

Also known as a stocks and shares ISA, an account that allows you to hold a wide range of assets, including cash, funds, shares, gilts, bonds, exchange traded funds (ETFs), exchange traded commodities (ETCs) and investment trusts. Unlike cash ISAs, these can fall in value as well as rise.

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Innovative Finance ISAs

This higher risk option lets you lend your savings out to borrowers through peer-to-peer lending platforms, where interest earned is tax-free.

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Lifetime ISAs

The lifetime ISA could help you get on the property ladder for the first time, or contribute towards your retirement savings.

Each tax year, all subscriptions made into a Lifetime ISA up to the maximum of £4,000, will receive a 25% government bonus. This is equivalent to a bonus of £1 for every £4 saved.

Barclays do not offer innovative finance or lifetime ISAs.

What’s the ISA allowance?

It’s a set amount you can put into ISAs (Individual Savings Accounts) each tax year, without paying tax on any money your ISAs make.

In the 2019/20 tax year, your ISA allowance is £20,000. Here’s how you can use it:

  • You can use your ISA allowance in full with either a cash ISA or an investment ISA or an innovative finance ISA, paying in £20,000
  • Alternatively, you can split your ISA allowance, using it as you wish across the four different types of ISA (subject to individual account limits), as long as you don’t pay in more than £20,000 across them all
  • With a Help to Buy ISA, you can pay in up to £1,200 in the calendar month of account opening and then up to £200 per calendar month thereafter. A Help to Buy ISA also counts as a cash ISA, so if you pay into a Help to Buy ISA in the current tax year, you cannot also pay into another cash ISA
  • You can only pay into one of each type of ISA in each tax year
  • With a lifetime ISA, you can pay in a maximum of £4,000 in each tax year

Which Barclays ISA might be right for you?

A cash ISA may suit you best if you’re simply looking for a savings option with easy access to your money. If you’re prepared to take on the risk that you might lose money in exchange for a potentially higher return, you might want to consider an investment ISA. Alternatively, you may wish to consider making use of your other savings and investment tax allowances which apply to savings and investments held outside an ISA.

Just be mindful that, unlike cash savings, the value of investments can fall as well as rise and you may get back less than you invest. Tax-free means you won’t pay UK tax on any income or capital gains your ISA makes, provided all ISA conditions are met. Tax rules can also change, and their effects on you will vary depending on your individual circumstances.

Consider the following questions and select one or more, to reveal which Barclays ISA could suit you and your financial goals best.

  • Instant Cash ISA

    You might want to consider opening an Instant Cash ISA to earn tax-free interest on your savings.  Unlike some other accounts, Barclays Instant Cash ISA lets you access your money whenever you need to, giving you control over your annual ISA allowance, which is currently £20,000.

  • Flexible Cash ISA

    A Flexible Cash ISA gives you the benefit of a fixed rate for a set period, which can be great if you have a lump sum of money or want to make regular contributions. The Barclays Flexible Cash ISA could help you by offering the flexibility to access some of your money during the term if you need to.

  • Investment ISA

    If you’re prepared to hold investments for a longer period, and accept that you may get back less than you invest, you might want to consider an Investment ISA. Also known as a stocks and shares ISA, it could help you buy, hold and sell a wide range of investments such as funds, shares and bonds, and protect your returns from tax.

    Tax rules can change and their effects on you will depend on your own circumstances. It’s best to seek independent advice if you’re unsure about investing.

  • Barclays offer two ISAs that could help you save for your first home:

    Help to Buy: ISA

    Looking to get on the property ladder? A Help to Buy: ISA could help you make the first step with a 25% government bonus when you buy your first home. The bonus is based on savings between £1,600 and £12,000 and you can save up to £200 in each calendar month. There’s also an additional allowance of £1,200 in the first calendar month of opening the ISA. Our Help to Buy: ISA is also classed as a Cash ISA, so you can only pay into one of these in the same tax year.

    Instant Cash ISA

    You might want to consider opening an Instant Cash ISA to earn tax-free interest on your savings.  It doesn’t give as great a return as a Help to Buy ISA, but unlike some other accounts, the Barclays Instant Cash ISA lets you access your money whenever you need to, giving you control over your annual ISA allowance, which is currently £20,000.

Whether an ISA’s right for you will depend on your own individual needs and circumstances. These summaries are not recommendations and, in some cases, more than one ISA product could be equally suitable to your needs. Or you may decide that saving outside of an ISA is better for you. It’s important to consider all the benefits of each product and seek independent advice if you’re unsure. 

  • For all our ISAs (except Help to Buy: ISA and Flexible Cash ISA - Issues 1 to 9), any money you withdraw within a tax year can be replaced during the same tax year without counting towards your annual ISA allowance. This is known as ISA flexibility.

    For example, if you pay in £10,000 to your ISA on 6 April 2019, your remaining allowance for the 2019/20 tax year will be £10,000. If you then withdrew £5,000 from this ISA on 1 June 2019, your remaining 2019/20 ISA allowance would be £15,000.

    Remember that money you’ve withdrawn needs to be paid back into the ISA in the same tax year (if you choose to do so). You won’t be able to replace the money the following tax year without it counting towards your ISA allowance. The tax year runs from 6 April to 5 April the following year.

    If you’d like to transfer your ISA to a new provider and where you’ve withdrawn previous years’ subscriptions from your ISA, any withdrawals not replaced prior to the transfer can’t be replaced with your new provider without counting towards your annual ISA allowance.

    If you’ve made withdrawals and intend to re-subscribe it in the same tax year, you’ll need to ensure the ISA from which you made the withdrawal remains open.

    Where you’ve withdrawn current year subscriptions from your ISA, your remaining current year ISA allowance will be transferred to your new provider. Where you’ve withdrawn previous tax year deposits from your ISA, you must replenish these before transferring to a new provider, otherwise you’ll lose them for good. For example, if you subscribed £20,000 in the current tax year, having already subscribed £5,000 in a previous tax year, and you withdrew the full £25,000, you would lose the ability to replenish the £5,000 withdrawn from previous tax years’ subscriptions if you transferred your ISA to another provider without first paying this £5,000 back in.

    For example, if on 1 June you subscribe £5,000 and on 1 July you withdraw £2,000, transferring your remaining current year subscriptions of £3,000 to a new provider, your remaining current year ISA allowance with your new provider would be £17,000 (based on 2019/20 ISA allowance of £20,000).

  • If you have more than one ISA (cash, investment, innovative finance or lifetime) and you’d like to combine them or you’d like to transfer your money into a new ISA, it’s best to use the ISA Transfer Service to move or combine your savings. However, if you transfer from a Lifetime ISA, it will count as a withdrawal from that account type and the amount you transfer out will be subject to a 25% government charge.

    Using the ISA Transfer Service means previous years’ savings you transfer won’t count towards your current annual allowance.

    Remember, you can transfer all or just some of your other ISA balances, and you can also transfer between all types of ISA.

    Please note that unless transferring in a Help to Buy ISA from another Help to Buy ISA, the receiving Help to Buy: ISA is subject to the monthly Help to Buy: ISA limits of £1,200 in the first calendar month, and up to £200 per calendar month afterwards.

    Before you transfer, make sure you are aware of any transfer fees from your current provider, other costs that you might incur, disadvantages that you might encounter or any benefits you might lose. Transferring cash or investments held in ISAs won’t affect their tax-efficient status. More about transferring your investments.

    How to transfer

    It’s easy to transfer into a Cash ISA with us – if you’re registered for Online Banking, simply log in to complete a transfer form giving us the account details of the other ISA(s) and we’ll do the rest. Alternatively, you can call us on 0345 744 5445 1 or pop into a branch to arrange an ISA transfer.

    You can transfer cash and investments held within ISAs elsewhere to a Barclays Investment ISA online. Find out more.

    It can take up to 15 working days for any cash ISA transfer-in to be completed, and a bit longer for investments. While the transfer takes place, any money in investment ISAs may not be invested in the stock market.

  • If I open a cash ISA at the end of one tax year, what happens to the interest in the new tax year?

    The interest you earn on your money in a cash ISA remains tax free for the life of the ISA, providing all ISA conditions are met. The rate of the interest paid might change, but it will remain tax free. However, the government may change the ISA rules in the future.

    If I transfer my previous years’ deposits into a new ISA, does it count towards my current tax year ISA allowance?

    No, it doesn’t. You are free to transfer previous years’ ISA funds into a new cash or investment ISA and this won’t count towards the current year’s allowance. For example, if you have £18,000 in previous ISAs, you can transfer the balance into your new ISA and still have your £20,000 allowance for the current tax year. The interest on the combined balance will also be tax free. Remember to complete a transfer form, which you can do in branch, over the phone or by logging into Online Banking.

    What happens if I inherit an ISA allowance from a spouse or civil partner?

    You can receive certain ISA benefits that your spouse or civil partner had built up in any ISAs they had, if they passed away on or after 3 December 2014. This is known as an “Additional Permitted Subscription (APS) allowance” and must be used within 3 years from the date of death.

    Is the money held in my Barclays ISAs protected by the Financial Services Compensation Scheme?

    For money held in cash ISAs, your eligible deposits with Barclays Bank UK PLC are protected up to a total of £85,000 by the FSCS – the UK's deposit guarantee scheme. This total covers all of your accounts held with Barclays Bank UK PLC, not just your cash ISAs. If the total value of all your individual deposits held with Barclays Bank UK PLC is above the £85,000 coverage limit, you will only be covered on amounts up to £85,000.

    For money held in an Investment ISA, your eligible deposits are held with Barclays Investment Solutions Limited (BISL) and are covered by the FSCS up to the first £50,000.

  • ISA checklist

     

    Help to Buy: ISA (Cash ISA)

    Cash ISA

    Stocks & Shares ISA

    Innovative Finance ISA 

    Lifetime ISA (LISA)

    Junior Cash ISA/

    Junior Investment ISA

     

    Our accounts

     

    Help to Buy: ISA

    Instant Cash ISA

    Flexible Cash ISA

    Premier Flexible Cash ISA

     

    Investment ISA

    What can it be used for?

    Purchasing a first home

    All-purpose savings

    All-purpose investments

    Peer to peer loans

    Purchasing a first home and/or retirement

    For children under the age of 18

    Eligible age to open ISA

    16+

    16 or 18 depending on the account

    18+

    18+

    18 – 39

    0 – 18

    How much can be saved?

    £200 per month

    (£1,200 in month of account opening)

    Up to £20,000 per tax year (2019/20) 

    Up to £20,000 per tax year (2019/20)

    Up to £20,000 per tax year (2019/20)

    Up to £4,000 per tax year

    (up to the age of 50) from 6 April 2017

    Up to £4,368 per tax year (2019/20)

    ISA allowance for the 2019/20 tax year is £20,000

    ISA allowance for the 2019/20 tax year is £20,000

    ISA allowance for the 2019/20 tax year is £20,000

    ISA allowance for the 2019/20 tax year is £20,000

    ISA allowance for the 2019/20 tax year is £20,000

    Junior ISA allowance for 2019/20 tax year is £4,368

    Is there a government bonus?

    • 25% bonus based on overall contribution
    • Bonus paid on amounts saved between £1,600 and £12,000 up to a maximum bonus of £3,000

    N/A

    N/A

    N/A

    • 25% bonus based on monthly contributions
    • Bonus paid up to age 50

    N/A

    Are there restrictions?

    • First time buyers only
    • Bonus is paid upon completion
    • Can open HTB: ISA until 30 Nov 2019. After that date they won’t be available to new savers and bonus must be claimed by 1 Dec 2030 

     

    • Please see individual cash ISA product terms for eligibility and withdrawal restrictions 
    • Please see our product terms
    • Investments can fall and rise in value and you may get back less than you invest 

     

    • Depends upon each provider’s product terms

     

    • Withdrawals not for first home purchase or retirement – government fee of 25% of the amount withdrawn will be deducted at the time withdrawal is made
    • A withdrawal for first home purchase can only be made after LISA has been open for 12 months

     

    • No withdrawals are allowed. Money cannot be taken out until the child reaches 18
    • At 18, the funds are given directly to the child or the account becomes an ‘adult’ ISA

     

    Can customers save in more than one ISA?

    If you subscribe to a Barclays HTB: ISA you can also subscribe to:

    • Investment ISA
    • Innovative Finance ISA
    • Lifetime ISA

     

    If you subscribe to a Barclays Cash ISA you can also subscribe to:

    • Investment ISA
    • Innovative Finance ISA
    • Lifetime ISA

    If you subscribe to a Barclays Investment ISA you can also subscribe to:

    • A cash ISA (incl. HTB: ISA)
    • Innovative Finance ISA
    • Lifetime ISA

    If you subscribe to a Innovative Finance ISA you can also subscribe to:

    • A cash ISA (incl. HTB: ISA)
    • Investment ISA
    • Lifetime ISA

    If you subscribe to a Lifetime ISA you can also subscribe to: 

    • A cash ISA (incl. HTB: ISA)
    • Investment ISA
    • Innovative Finance ISA

     

    Each child can have one cash Junior ISA and one stocks and shares Junior ISA at any one time.

    These can be held with different providers

Helpful insights

Take a look at some of our resources to help you decide if you should use your allowance.

Cash ISAs

Enjoy a sweeter way to save and use your ISA allowance with one of our cash ISAs. You won’t pay tax on any interest your ISA makes.

Investment ISA

Enjoy a sweeter way to invest and use your ISA allowance with our Investment ISA. You won’t pay tax on any returns your investments make.