ISAs Explained
What is an ISA?
An ISA is an Individual Savings Account where you do not pay tax on the interest earned.
What’s more, ISAs are NOT counted as part of your Personal Savings Allowance (PSA).
The Personal Savings Allowance, which came into effect on 6th April 2016, is the amount of interest earned on your savings before having to pay tax. Your allowance will depend on whether you are a basic, higher or additional-rate taxpayer.
Who can open an ISA?
If you’re a UK resident and 16 years of age or over, you can open a Cash ISA - and we can help you with that right here at Progressive.
Stocks and Shares, Innovative Finance and Lifetime ISAs are the other types of ISA available. You must be 18 to open one of these and they are not offered at Progressive.
What is the ISA allowance?
You will receive a new ISA allowance each tax year, running from 6 April to 5 April the following year. This is the maximum amount you can save into any ISA.
For the tax year 2023/2024 the ISA allowance is £20,000.
If you don’t use it, you’ll lose it, as the allowance cannot run into the next tax year. You will receive a new allowance every new tax year and the amount can vary from one year to the next.
Other benefits
We understand that life is rarely uneventful and there may be times you’ll need to dip into your savings.
ISA flexibility gives you just that.
You can withdraw money from your Cash ISA (subject to the terms and conditions of your account) and replace it within the same tax year, without it affecting your annual tax allowance. For example, if you had invested the full £20,000 in one tax year, you would be able to withdraw £5,000 and deposit another £5,000 before the year is up.
Replacement money MUST be paid back into your account within the same tax year or your allowance will be affected.
At Progressive we offer ISA Flexibility on our instant access Cash ISA and Cash ISA Saver only.
Types of ISA
There are four types of ISA on the market, and without doubt the most popular is the Cash ISA. At Progressive we focus solely on Cash ISAs but below, you can find out more about the various ISAs available.
Cash ISA
- A savings account where you don’t pay tax on the interest you earn.
- The Help to Buy: ISA is a type of Cash ISA designed to help people save for their first home. You can pay in up to £200 per month and the government will add a bonus of 25% when you purchase your first property, provided your closing balance is between £1,600 and £12,000, with the maximum bonus being £3,000.
- You can only save into one Cash ISA in a tax year.
Stocks and Shares ISA
- A Stocks and Shares ISA is a tax-efficient way to invest in a wide range of stocks, shares, funds, bonds and gilts.
Innovative Finance ISA
- Innovative Finance ISAs allow interest and gains from peer to peer loans to qualify for tax advantages.
Lifetime ISA
- Lifetime ISAs allow you to save up to the Lifetime ISA allowance each tax year and receive a government bonus of 25% of what you have saved. You can use some or all of the money to buy your first home or keep it until you are 60.
Please note, Progressive does not offer Stocks and Shares ISA, Innovative Finance ISA or Lifetime ISA.
Can I fund more than one ISA in a tax year?
There are limits as to how many ISAs you can have in each tax year. You can only put money into one of each type and you must make sure you don’t exceed your allowance for the tax year:
- Cash ISA
- Stocks and Shares ISA
- Innovative Finance ISA
- Lifetime ISA
Remember, a Cash ISA includes a Help to Buy: ISA.
Transferring ISAs
Did you know you can transfer your ISA from one provider to another at any time?
You can transfer some or all of the funds in your ISA from previous tax years. However, if you’re transferring funds from the current tax year you must transfer the full amount.
You can also switch money from one type of ISA to another, for example, you can move money from a Cash ISA to a Stocks and Shares ISA. Not all ISA providers accept transfers however, so it’s always worth checking with the provider you’re hoping to transfer to.
At Progressive we can take you through the transfer process so call in and speak to us today.
Will transferring money affect my tax-free status?
Your tax-free status won’t be affected as long as you follow the correct process. Don’t withdraw the money from your ISA yourself, instead, simply contact your chosen ISA provider, complete a transfer form and they will organise the transfer for you.
At Progressive we only accept the transfer of your Cash ISA from another provider into the following Progressive Cash ISA accounts:
- Cash ISA (Issue 5)
- Fixed Rate ISA Bonds
Your current year’s subscriptions must be transferred in full in line with the ‘one Cash ISA per tax year’ rule.
We also accept the transfer of your existing Help to Buy: ISA from another ISA provider with the full balance transferred and the account closed.
You may transfer your existing Progressive Cash ISA to another ISA provider subject to the specific account terms and conditions. Your new ISA provider will ask you to complete a transfer form and they will send it to us to start the transfer process.
For further information please contact your local branch.
What happens if an ISA account holder passes away?
It’s not something we like to think about, but should the worst happen, there are some things you’ll need to know.
If you are the surviving spouse or civil partner of the person who has passed away, you can inherit an additional ISA allowance. This allowance is known as an Additional Permitted Subscription (APS) or inherited ISA allowance.
This means that you will inherit the deceased’s ISA allowance, but not necessarily the balance of the ISA account. The allowance is available for 3 years after the date of death or 180 days after the administration of the Estate has been completed, whichever is longer.
If your spouse or civil partner passed away between 3 December 2014 and 5 April 2018, your inherited ISA allowance will be the value of their ISA at the date of their death.
If your spouse or civil partner died on or after 6 April 2018, the ISA may remain open and will be called a ‘Continuing ISA’. The account will cease to be a Continuing ISA upon the following:
- The administration of your partner’s Estate is complete
- The ISA is closed
- 3 years after your spouse or civil partner’s time of passing, whichever is the earliest
Your inherited ISA allowance will be either:
- The value of your partner’s ISA at time of passing or
- The value of the ISA at the point it ceases to be a Continuing ISA, whichever is the higher.
Please note at Progressive we can only accept an inherited ISA allowance from a surviving spouse or civil partner where the deceased ISA holder was an existing Member and held their Cash ISA with the Society.
Unfortunately, we cannot accept the transfer of an inherited ISA allowance from another ISA manager. The surviving spouse or civil partner may only make a one-off permitted subscription to their Progressive Cash ISA and we are unable to accept multiple subscriptions.
It’s worth noting, if the surviving spouse or civil partner does not subscribe the full amount of their inherited ISA allowance then any unused balance will be lost.
Why save with Progressive?
For over 100 years, we’ve been helping people in Northern Ireland save for the important things in their lives. We’re a building society, made up of local Members helping local people, always with your best interests at heart.
We support people all over Northern Ireland saving for their future.
We have knowledgeable staff in each of our 11 branches, so you can pop in and talk to us face to face about finding the right savings account for you.
Simply bring some photographic ID, e.g. a current passport or driving licence, along with you and we’ll have you up, running and saving in no time. For further information on photographic ID required view our Proving your Identity leaflet here.
For further information, simply contact your local branch and we’ll be more than happy to help you.
Get in touch today!
We look forward to welcoming you.
Speak to our team today
To request further information regarding our savings products or to request help with an existing account, please get in touch.