About ISAs

What is an ISA?

ISA stands for Individual Savings Account. ISAs are a way of holding savings or investments without paying personal tax on interest received, or on the growth of the investment.

The key difference between an ISA and a standard savings account is the tax treatment on interest received. All interest earned from a Cash ISA is free of personal tax, for as long as those savings stay within an ISA. For standard accounts, basic-rate taxpayers can earn up to £1,000 interest per year tax-free under their Personal Savings Allowance (£500 per year for higher-rate taxpayers), but any interest earned above that amount will be treated as earned income and could be subject to the payment of tax.

Annual contributions are limited to £20,000 per individual, and any unused allowance can't be carried over to the following year, but there is no limit on the total ISA balance that can be reached. This means that for Cash ISAs, interest is tax-free regardless of the account balance.

What new ISA rules were introduced on 6th April 2024?

Three changes were made to the ISA rules which could change what Castle Trust Bank allow:

  • Previously, you could only open one of each type of ISA each tax year. That rule has been abolished, which means that (subject to maximum annual contribution limits, which remain the same at £20,000) you can now open as many ISA accounts as you like. Your ISAs do not need to be opened with the same ISA Manager.
  • The rules now allow you to make partial ISA Transfers between ISA Managers, including current-year contributions (the previous rules required you to make a full transfer of current-year contributions). You should note that some ISA Managers, including Castle Trust Bank, are not able to facilitate partial transfers of current-year contributions and therefore you can still only transfer the full amount of your account.
  • The minimum age for opening any new ISA account has now been standardised across at 18 years and above. This did not impact Castle Trust Bank as our minimum age has always been 18 years.

What types of ISA are there?

There are four main types of ISA available:

  • Cash ISAs (where the savings are held as cash)
  • Stocks and shares ISAs (where the savings are invested)
  • Innovative Finance ISAs (where savings are held with a peer-to-peer lender)
  • Lifetime ISAs (where savings are used towards buying a first home, or for later life)

Castle Trust Bank only offers Cash ISAs.

Should I consider an ISA?

An ISA might be right for you if:

  • You want to receive any interest tax-free, regardless of your personal tax situation
  • You are happy to save in your own name only, rather than in joint names
  • You understand there is personal contribution limit of £20,000 per tax year

See our ISA rates

An ISA might not be right for you if:

  • Utilising the tax-free Personal Savings Allowance allows you to get better interest rates elsewhere
  • You want to save in an account in joint names (ISAs can only be held in single names)
  • You want to save more than the ISA contribution limit each tax year

See our non-ISA rates

What is an ISA Transfer?

The value of an ISA can be transferred between one ISA Manager and another. In the case of a Cash ISA, this means that a person can move their ISA to an account offered by a different bank, in order to try to get the best interest rate available. It’s important to note, however, that the balance has to be transferred using a specific process; if the money is withdrawn from an ISA and then deposited elsewhere, it will lose its ISA status.

Does Castle Trust Bank accept ISA Transfers?

We do accept ISA Transfers. If you wish to transfer an existing ISA to us, you’ll need to open a new ISA account first as part of your application journey, you will then need to confirm 'Yes' to transferring an existing ISA, and provide the details of that account. Please note you will need to open a new account for each ISA you wish to transfer. If you want to understand the process in more detail, please see our ISA Transfer Guide.

We can accept transfers from Stocks and Shares ISAs, but the assets will need to be encashed before the transfer is made. If you are considering transferring from a Stocks and Shares ISA, you should first make your own assessment about whether encashing the assets is the right thing for you to do. If in doubt, please seek professional financial advice.

What is a Personal Savings Allowance?

Your Personal Savings Allowance is the amount of interest you are allowed to earn from savings (not including interest earned on ISAs) each tax year, before the interest is added to your personal income for the calculation of your personal income tax liability. The Personal Savings Allowance is applied across interest received from all of your bank accounts (except ISAs), not just from your Castle Trust Bank accounts.

The allowance is applied on a sliding scale, depending on your personal income tax circumstances:
• If you're a basic rate tax payer, your allowance is £1,000
• If you're a higher rate tax payer, your allowance is £500
• There is no allowance for additional rate tax payers
An important point to note is that interest is counted towards the allowance in the tax year that you can access it. This means that if you take out a fixed rate savings account with a term of more than one year, and interest is paid at maturity, all interest paid on that account is counted towards the Personal Savings Allowance in the year the account matures.

Please note, this material is provided for informational purposes only and does not represent financial advice or recommendation. The above information is based on the current HMRC legislation and is subject to change.

Saving with Castle Trust Bank you are FSCS Protected

Your money's safe

Your eligible deposits with Castle Trust Bank are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK’s deposit guarantee scheme. Any deposits you hold above the limit are unlikely to be covered.

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Your home may be repossessed if you do not keep up repayments on your mortgage. Loans are subject to status, terms and conditions. This website is for information purposes only. If you are in any doubt regarding suitability of our products please seek advice from an accredited independent mortgage adviser.

Your eligible deposits with Castle Trust Bank are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK’s deposit guarantee scheme. Any deposits you hold above the limit are unlikely to be covered. For further information about the compensation provided by the FSCS, refer to the FSCS website at fscs.org.uk.

Castle Trust Bank means Castle Trust Capital plc, a company incorporated in England and Wales with company number 07454474 and registered office at 10 Norwich Street, London, EC4A 1BD. Castle Trust Capital plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, under reference number 541910.

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