What’s is an ISA and how does it work?

An ISA (Individual Savings Account) is a tax efficient way of saving or investing, as you don’t pay tax on the interest earned on cash in an ISA, or on income or capital gains from investments in an ISA. All UK residents aged 18 or over can open an ISA. The amount you can save is confirmed by the Government in advance of each new tax year (which starts on the 6th April each year). There are different types of ISAs available. However, here at Charter Savings Bank, we only offer Cash ISAs. Cash ISAs are similar to our other non-ISA savings accounts, but the interest earned is tax-free and does not affect your Personal Savings Allowance. The Personal Savings Allowance is the amount of interest you can earn on your savings before having to pay income tax on it. See our Personal Savings Allowance information sheet on the Useful Documents page on our website for further information. For the current tax year, the maximum deposit you can make into an ISA is £20,000. You can choose to split this between Stocks & Shares ISAs, Cash ISAs, Innovative Finance ISAs, Help to Buy ISAs and the Lifetime ISA (although there’s a limit to how much you can deposit in to the last two. For example, you can only put £4,000 in the Lifetime ISA each year)

How much can I save in an ISA per year?

Every year, the Government sets a maximum amount that can be saved in an ISA in that year you can find details of this year’s ISA allowance on the HMRC website..

The annual allowance can be split across a cash ISA, stocks and shares ISA, innovative finance ISA and lifetime ISA.

You can only subscribe to one cash ISA in each tax year (6 April to 5 April).

How does the tax-free status of an ISA work?

An ISA (Individual Savings Account) is a special type of account where any interest, dividends, or investment gains are completely tax-free. This means:

• Cash ISA: Interest earned is not subject to income tax.
• Stocks & Shares ISA: Any profits from selling investments or dividends are free from capital gains tax and income tax.
• Lifetime ISA or Junior ISA: Growth inside the ISA is also tax-free, including government bonuses for a Lifetime ISA.

Key point: The tax-free benefit only applies while the money stays inside the ISA. If you withdraw it and hold it outside, it can be taxed like normal savings.

Can I have more than one ISA?

Under HMRC regulations and where a provider allows, you are permitted to subscribe with multiple ISA providers within the same tax year (6 April to 5 April).*

You can hold more than one ISA product within the Charter Savings Bank Mix & Match ISA to suit your needs (e.g. one Fixed Rate Cash ISA, one Easy Access Cash ISA).

Subscriptions to one or more of our ISA products in a tax year doesn’t constitute a subscription to another Cash ISA in that tax year.

Please note even if you have paid new funds into a cash ISA this tax year and don’t wish to transfer those, whilst you can’t pay new funds to an ISA product with us in the same tax year you can still transfer funds from ISAs with another ISA provider for previous tax years.

Can I withdraw money from an ISA?

Can I make a withdrawal from a Fixed Rate Cash ISA?

Yes, although this will be subject to a charge by way of loss of interest, the amount of which depends on the term of your Account. Please refer to your Account’s Specific Conditions for details which are part of the Key Features & Summary Box document which you accepted when you applied for your Account.

Any amounts you withdraw will no longer be held in your Cash ISA. This means that any tax benefits in respect of the amount withdrawn will be lost and the money withdrawn cannot be reinstated in your Cash ISA later in that tax year without impacting your annual ISA allowance for that tax year.

If you experience any difficulty requesting a withdrawal or transfer to another account with us then please phone us as this may be because the amount of the charge exceeds the interest due.

If you wish to make a withdrawal, please log in to your Account.

Can I make a withdrawal from a Notice Cash ISA?

Yes, although you will be required to give a number of days’ notice before accessing the funds. You can, alternatively, make a withdrawal at any time, without giving notice, but this will be subject to a charge by way of loss of interest. The amount of notice required or charge by way of loss of interest made depends on the notice period of your account. Please refer to your Account’s Specific Conditions for details which are part of the Key Features & Summary Box document which you accepted when you applied for your Account.

Any amounts you withdraw will no longer be held in your Cash ISA. This means that any tax benefits in respect of the amount withdrawn will be lost and the money withdrawn cannot be reinstated in your Cash ISA later in that tax year without impacting your annual ISA allowance for that tax year.

If you experience any difficulty requesting a withdrawal or transfer to another account with us then please phone us as this may be because the amount of the charge exceeds the interest due.

If you wish to make a withdrawal, please log in to your Account.

Is the money in an ISA protected?

Yes. All eligible deposits in UK savings accounts (including Cash ISAs) are protected up to a total of £120,000 by the Financial Services Compensation Scheme (FSCS), the UK’s deposit protection scheme. Any savings held above this limit are unlikely to be covered.

You should always check if your Cash ISA provider shares its FSCS cover with another institution as several providers could be owned by the same bank, meaning that even if you spread your savings across more than one provider you could only be protected for a total of £120,000 (not £120,000 per provider).

Visit fscs.org.uk for more information on the Financial Services Compensation Scheme.

Is it better to have multiple ISAs or one?

A Fixed Rate Cash ISA generally offers a higher rate of interest for money that you can afford to put away for a year or more.

Generally, you’ll get a higher interest rate if your put your money away for a shorter period of time. This will mean you can access your money a little sooner but you will then have to shop around for another account at the end of that term at which point interest rates may have reduced.

For longer term Fixed Rate ISAs, you may get a slightly lower rate of interest, but you’re guaranteed that rate for a longer time, regardless if rates move up or down. But you’ll be unable to access your money during the term of the account.

Fixed Rate Cash ISAs are limited edition accounts which may be withdrawn from sale at any time without notice - if you see one you like, don't take too long to apply!

Can I add to an existing ISA in the new tax year?

Yes. When a new UK tax year starts (6 April), your ISA allowance resets. You can continue to add money into an ISA you already have in the new tax year, as long as that account normally accepts new deposits. You don’t have to open a new ISA each year you can just add into your existing one up to your annual ISA allowance.

Can you transfer an ISA from one bank to another?

Yes, you can transfer all of this year’s subscriptions and those from previous years when you open a new Cash ISA with us.

You can transfer from one Cash ISA to another one with a new provider. And you can transfer money from an existing Stocks and Shares ISA into a Cash ISA.

You should always make sure to transfer your ISA through an ISA transfer request with your bank or building society, or any withdrawals will no longer be held in your Cash ISA. This means that any tax benefits in respect of the amount withdrawn will be lost, and the money withdrawn can’t be repaid into a Cash ISA later without impacting your annual ISA allowance for that tax year.

If you want to transfer your Cash ISA for the current tax year you must do so in full. If you’ve already subscribed to an ISA with another ISA provider in this tax year, you shouldn’t make a deposit into an ISA with us for this tax year until the ISA has been transferred in full.

Before you request the transfer, check the terms and conditions of the ISA you’re transferring from as there may be restrictions or charges that apply.

If you’d like to find out more, take a look at our award-winning range of Cash ISAs or visit our ISA hub.

What are the rules for opening an ISA?

To open an ISA in the UK, you must be 18+, UK tax-resident, and (for Lifetime ISAs) under 40. You can apply through most banks or investment providers, and you’ll need your NI number. There are rules on how much you can save per year across all your ISAs.

You can open a Cash ISA as long as you’re aged over 18.

You can only open an account in your own name - joint accounts are not possible as it’s an individual savings account; and you’re not able to open them on behalf of anybody else either.

What is the new cash ISA limit under Autumn budget 2025?

From 6 April 2027, the annual limit you can put into a Cash ISA will be cut to £12,000 for savers who are under 65. This is part of the Autumn Budget 2025 changes.

What happens to my cash ISA after April 2027?

After April 6, 2027, if you are under 65 you can only add up to £12,000 a year into cash ISAs. If you are 65 or over, you keep the £20,000 cash ISA limit. Money you already have in your Cash ISA stays tax-free and isn’t reduced by these changes.

Is the £20,000 cash ISA allowance dropping?

Yes. The £20,000 cash ISA allowance that currently applies will be reduced to £12,000 per tax year for most savers from April 2027. The overall ISA allowance remains £20,000.

From when does the new £12,000 cash ISA limit apply?

The new £12,000 annual cash ISA limit applies from the start of the tax year on 6 April 2027. Until then, the current £20,000 rule still applies.

Can I still put £20,000 into a Stocks & Shares ISA (or split across types)?

Yes. The overall ISA allowance is still £20,000 each tax year, and you can use this in a Stocks & Shares ISA. The new rule just limits how much of that allowance can be used for Cash ISAs.

What happens to my existing Cash ISA - are those savings affected?

Money you’ve already put into a Cash ISA before April 2027 stays untouched and continues to earn tax-free interest. The new limit only affects new deposits from April 2027 onwards.

What does this mean for interest and savings tax - are savings outside ISA now more taxed?

ISAs still keep your interest tax-free inside the ISA. However, the government has also announced that income tax on savings interest outside ISAs will rise from April 2027 (e.g., basic rate to 22%, higher to 42%, additional to 47%), so savings outside an ISA may be more heavily taxed.

What are the different types of ISAs?

• Cash ISA – A savings account where the interest you earn is tax-free. Good for short-term savings and low-risk growth.
• Stocks & Shares ISA – Allows you to invest in shares, funds, or bonds. Potentially higher returns, but with investment risk.
• Lifetime ISA (LISA) – For people aged 18–39. Can be used to save for a first home or retirement. The government adds a 25% bonus to contributions.
• Innovative Finance ISA – Invests in peer-to-peer loans and some crowdfunding options. Returns are tax-free but risk is higher.
• Junior ISA – For children under 18. Managed by a parent or guardian, with tax-free interest or investment growth.

Cash ISA vs Stocks & shares ISA - which is better?

• Cash ISA: Safe and simple. Your savings earn tax-free interest, and the value doesn’t usually go down. Best for short-term goals or if you don’t want to take risks.
• Stocks & Shares ISA: Invests in shares, funds, or bonds. Returns can be higher than a Cash ISA over the long term, and gains are tax-free, but the value can go up or down. Best for long-term goals and if you’re comfortable with risk.

Which is better? It depends on your goals and risk tolerance:

• Use a Cash ISA for safety and short-term savings.
• Use a Stocks & Shares ISA for long-term growth and beating inflation.

What are the eligibility requirements for different types of ISAs?

Eligibility requirements for different types of ISAs (UK):

• Cash ISA & Stocks & Shares ISA – You must be 18 or older and a UK resident for tax purposes.
• Lifetime ISA (LISA) – You must be aged 18–39 and a UK resident. Contributions can continue until age 50.
• Innovative Finance ISA – You must be 18 or older and a UK resident.
• Junior ISA – For children under 18, managed by a parent or guardian. The child must be resident in the UK.

Other rules:

• You can only open one of each type of ISA per tax year.
• You must stay within the annual ISA allowance (£20,000 for 2025/26 across all ISAs you hold).

How many different types of ISAs can you have?

In the UK, you can have one of each type of ISA per tax year, but your total contributions across all ISAs cannot exceed the annual ISA allowance (£20,000 for 2025/26).

You can also keep multiple ISAs from previous years, but each year you can only contribute to one of each type.

What happens to ISA tax benefits if I change ISA type?

If you transfer your money from one ISA to another using the official ISA transfer process, your money keeps its tax-free status.

If you withdraw the money and then deposit it into a new ISA yourself, the money loses its tax-free status while outside the ISA, and the amount may count toward your annual ISA allowance.

Is it better to have an ISA or a Savings account?

• ISA: Any interest, dividends, or investment growth inside an ISA is tax-free, so more of your money stays yours. This is especially useful if you have a larger savings balance or invest in stocks & shares.
• Regular savings account: Interest is taxable above your Personal Savings Allowance (currently £1,000 for basic-rate taxpayers, £500 for higher-rate).

Which is better?

• For short-term, small savings, a regular savings account might be fine.
• For long-term savings or larger balances, an ISA is usually better because it protects your growth from tax, helping your money grow faster.

Can I have both an ISA and a Savings account?

Yes. You can have both an ISA and a regular savings account at the same time. Many people do this to balance:

• Tax-free growth in an ISA (interest, dividends, or investment returns are not taxed).
• Easy access or extra savings in a regular savings account, which may offer more flexibility or higher interest for smaller balances.

Key point: Money in a regular savings account is subject to tax on interest above your Personal Savings Allowance, while money in an ISA remains tax-free.

Is splitting between ISA and savings account a smart move?

Yes, it can be a smart move, depending on your goals:

• ISA: Use this for your long-term savings, as the interest or returns are tax-free. It’s ideal for larger amounts or money you want to grow without paying tax on the interest (especially if you expect to earn more than your personal savings allowance).
• Savings account: Can be useful for short-term savings or if you want more flexibility. However, interest in a regular savings account is taxable above your Personal Savings Allowance (which is £1,000 for basic-rate taxpayers).

Smart move?

• If you're saving for long-term goals, putting money into an ISA makes more sense to benefit from tax-free growth.
• If you need instant access or are saving for short-term goals, a regular savings account might offer more flexibility.

Key point: Balance both based on your tax situation and time horizon for savings.

Should I transfer my savings into an ISA?

Transferring savings into an ISA can be a smart choice because:

• Any money in an ISA earns interest or investment returns tax-free, so your savings can grow faster.
• You can transfer existing cash or Stocks & Shares ISAs from one provider to another without losing tax benefits if you use the official ISA transfer process.

Things to consider before transferring:

• Check for transfer fees or exit penalties from your current account.
• Compare interest rates or investment options to make sure you’re getting better returns.
• Make sure the transfer is done officially; if you withdraw and redeposit manually, you may lose tax-free status and affect your annual allowance.

What are the benefits of using an ISA for savings?

Cash ISAs enable people to earn tax-free interest on their savings without affecting their annual Personal Savings Allowance. The tax treatment of ISAs may be subject to change in the future and is based on your individual circumstances.

What happens to my ISA tax benefits if I move money out?

When you take money out of an ISA, the money you’ve already saved keeps its tax-free status while it’s inside the ISA. However:

• Once you withdraw the money and move it outside the ISA, it loses its tax-free status. Any interest, dividends, or investment gains earned on that money after leaving the ISA may be subject to income tax or capital gains tax.
• If you transfer the money to another ISA using an official ISA transfer, your money keeps its tax-free status. You should always use the provider’s ISA transfer process rather than withdrawing and redepositing to avoid losing tax benefits.

Key point: Simply withdrawing and holding your savings outside an ISA removes the tax protection, but transferring it properly to another ISA preserves it.

Can I withdraw money from my ISA tax free?

Can I make a withdrawal from a Fixed Rate Cash ISA?

Yes, although this will be subject to a charge by way of loss of interest, the amount of which depends on the term of your Account. Please refer to your Account’s Specific Conditions for details which are part of the Key Features & Summary Box document which you accepted when you applied for your Account.

Any amounts you withdraw will no longer be held in your Cash ISA. This means that any tax benefits in respect of the amount withdrawn will be lost and the money withdrawn cannot be reinstated in your Cash ISA later in that tax year without impacting your annual ISA allowance for that tax year.

If you experience any difficulty requesting a withdrawal or transfer to another account with us then please phone us as this may be because the amount of the charge exceeds the interest due.

If you wish to make a withdrawal, please log in to your Account.

Can I make a withdrawal from a Notice Cash ISA?

Yes, although you will be required to give a number of days’ notice before accessing the funds. You can, alternatively, make a withdrawal at any time, without giving notice, but this will be subject to a charge by way of loss of interest. The amount of notice required or charge by way of loss of interest made depends on the notice period of your account. Please refer to your Account’s Specific Conditions for details which are part of the Key Features & Summary Box document which you accepted when you applied for your Account.

Any amounts you withdraw will no longer be held in your Cash ISA. This means that any tax benefits in respect of the amount withdrawn will be lost and the money withdrawn cannot be reinstated in your Cash ISA later in that tax year without impacting your annual ISA allowance for that tax year.

If you experience any difficulty requesting a withdrawal or transfer to another account with us then please phone us as this may be because the amount of the charge exceeds the interest due.

How can ISA help me beat inflation?

An ISA (Individual Savings Account) can help protect your money from inflation because the interest or investment returns you earn inside an ISA are tax free. This means all the growth stays in your account, giving your savings a better chance to grow faster than inflation. For example:

• Cash ISAs pay interest on your savings without tax, so your money grows faster than if it were in a normal savings account.
• Stocks & Shares ISAs let you invest in shares, funds, or bonds. While these carry more risk, historically they have provided returns higher than inflation over the long term.

By using your ISA allowance wisely, you can help your money keep up with or beat inflation, making your savings worth more in the future.

Example:

• You put £10,000 into a Cash ISA earning 4% interest per year, tax free.
• Inflation is running at 3% per year.

After one year:

• Your ISA grows to £10,400 (4% of £10,000).
• Inflation reduces the purchasing power of money outside the ISA to £9,700 in today’s terms.

Because your ISA growth (4%) is higher than inflation (3%), your money keeps its value and grows slightly in real terms.