ISA Guide

Our guide to ISAs gives you more information about these tax-free savings accounts.

What is an ISA?

An ISA is an Individual Savings Account. If you save in an ISA, you are entitled to keep all that you receive from that investment and not pay any tax on it.

Each year, the Government sets how much you can save in an ISA and there are two types of ISAs – Cash ISAs and Stocks and Shares ISAs.

What’s the difference between a Cash ISA and a Stocks and Shares ISA?

A Cash ISA lets you save in things like a deposit account and with a Stocks and Shares ISA you can invest in the stock market.

With an ISA in place, you don’t have to pay income tax or capital gains tax on any returns, although you might have to pay other taxes, if they apply to you.

Principality has a great range of Cash ISAs, from easy access accounts to longer-term investments. Cash ISAs can be for fixed terms and at fixed or variable rates.

We also offer Stocks and Shares ISAs through our branches – just book an appointment with a consultant and they’ll guide you through the options.

How many ISAs can I have?

You can only open one Cash and one Stocks and Shares ISA each tax year, but there’s no overall limit to how many ISAs you can have over different tax years. You can keep an ISA going after the end of the tax year when you opened it so it is possible to have lots of ISAs.

How much can I save in an ISA?

Each tax year – which runs from 6th April until 5th April the next year – the Government gives you an annual ISA allowance and you can save up to that amount in a Cash ISA, a Stocks and Shares ISA, or both. The ISA allowance is reviewed annually by the Government and ISAs may change in the future.

Depending on the account terms of your Cash ISA, you can choose to pay in the amount of your annual cash ISA allowance as one lump sum into your Cash ISA, or smaller amounts as and when you can.

If I don’t use my annual Cash ISA allowance this year, can I carry it over to next year?

You cannot carry one year’s ISA allowance over into the next year and if you don’t use your full tax free ISA allowance by April 5th, you’ll lose it when the tax year ends. So it’s important to act now.

Can I transfer money from another Cash ISA account to Principality?

Yes, Principality welcomes transfers from other providers and you can transfer out, subject to the Account Terms of your Cash ISA. If you have ISA savings with another provider, you may be able to transfer them to us and have the benefit of keeping all your tax free savings in one place.

We will give you step by step instructions on how to make the easy move from another provider when you apply for your Cash ISA. You just need to complete an ISA Transfer form.

We adhere to the guidance provided by the Building Societies Association (BSA) and British Bankers Association (BBA). We aim to complete ISA transfers within 15 working days, which is the accepted standard set out by the BSA and BBA.

What if I want to withdraw money from my Cash ISA?

You can make withdrawals from most Principality Cash ISAs (depending on the account terms), though many fixed term Cash ISAs do not allow withdrawals until their term has finished.

If your account is flexible then you are able to take money out of a Cash ISA and replace that money before the end of the same tax year, without it contributing towards your annual ISA allowance.

What if I change my mind?

If you are not happy about your choice of Cash ISA you may cancel it within 14 days of agreeing to open it. We will help you switch to another of our Accounts or we will give you all your money back with any interest you have earned.

Can anyone open an ISA?

ISAs help you to save tax-free and your tax position depends on your personal circumstances. Generally, as long as you are a UK tax resident, or a Crown employee serving overseas, or married to or a civil partner of a Crown employee serving overseas, and are over 16, you can open a Cash ISA, or if you are over 18, you can open both Cash and Stocks and Shares ISAs.

What’s the difference between a variable rate and a fixed rate Cash ISA?

A fixed rate Cash ISA offers a fixed rate of interest over a set period of time. You normally have to invest your money (usually in a lump sum deposit) for a set period and make no withdrawals within that time. Longer term fixed rates (for example, five year deals) usually offer high rates of interest.

The interest rate for a variable rate Cash ISA will change depending on market conditions. Our variable rate Cash ISAs are flexible. This means you'll be able to take money out and replace that money before the end of the same tax year without it contributing towards your annual ISA allowance.