ISAs made easy

Your guide to simple, tax-efficient savings

Want to know how you can save and invest tax-efficiently with an ISA? Confused by the options? Our guide explains the basics.

Most normal savings accounts and investments are taxed – so the tax man gets some of your interest, or investment growth.

Individual Savings Accounts (ISAs) are different, because you don’t pay tax on the interest on savings – or the capital gains on investments. An ISA is simply a way of preventing too much of your money from going to the tax man – and giving your finances a real boost.

You can use it to protect a savings account (in a cash ISA) or investment (in a stocks and shares ISA) from tax.

Of course, the government has to limit how much you can put in each tax year – up to £7,200 for stocks and shares ISA which can include up to £3,600 in a cash ISA.

From 6 October 2009, if you are aged 50 or over by 5 April 2010, you can invest up to £10,200 for a stocks and shares ISA which can include up to £5,100 in a cash ISA.

Whether you like saving in cash, stocks and shares, or a combination of both, there’s an ISA out there for you.

So to make the most of tax-efficient saving – start your NatWest ISA right now. After all, if you don’t use your ISA allowance in each tax year, you lose it.

A cash ISA is a lot like a regular savings account - except you don't pay any tax on your interest.

This makes a real difference to your savings, helping your money to grow.

How much can you save?

In the current tax year, you can put a maximum of £3,600 into a cash ISA. From 6 October 2009, if you are aged 50 or over by 5 April 2010 you can save up to £5,100.

Moving your cash ISA

If you have a cash ISA with another bank or building society, you can transfer this to a cash or stocks and shares ISA with NatWest. By transferring the funds, you keep all the tax benefits.

However, if you withdraw money from a cash ISA, you lose the tax benefits on the funds you’ve withdrawn. The only way you could reinvest into a cash ISA is to take advantage of the ISA allowance that you haven’t used.

Our stocks and shares ISAs give you the potential for higher levels of growth than cash ISAs.

However, remember that the value of stocks and shares can fall as well as rise – and you may not get back the full amount of your original investment.

Investing for the medium-to-long term

A stocks and shares ISA is designed to give you a tax-efficient return over years, not months. So although you can access your money at any time, you should consider this a medium to longer term investment.

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How much can you invest?

The most you can put into a stocks and shares ISA this tax year is up to £7,200. From 6 October 2009, customer aged 50 or over by 5 April 2010 can save up to £10,200.

Have you put money into a cash ISA during the current tax year? Then the most you can invest in a stocks and shares ISA is your annual limit minus the sum you’ve put into your cash ISA.

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A choice of managed funds

Our Expert Managed Solutions put your investment in the hands of specialist fund managers. You can choose from our:

We employ an expert firm to decide how to split the allocation of assets for each fund - such as cash, government bonds and equities. And we employ another firm to keep a close eye on the performance of each fund manager.

Expert Managed Solutions are provided by RBS Collective Investment Funds Limited.

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Select your own stocks and shares

Prefer to get hands-on with your investments? Our BrokerLine Self-Select ISA allows you to trade in a wide range of assets, including shares, government securities and corporate bonds.

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Q. Who can have a cash ISA?

A. Anyone who is resident and ordinarily resident in the UK, as well as being 16 or over can have a cash ISA. For a stocks and shares ISA, you need to be 18 or over.

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Q. How much can I put in an ISA?

A. At the moment, up to £7,200 or £10,200 (for customers aged 50 or over by 5 April 2010) a year in an ISA, subject to certain criteria.

You can use your tax-efficient saving allowance in two ways.

You can invest up to £3,600 or £5,100 (for customers aged 50 or over by 5 April 2010) in a cash ISA, plus put the remainder into a stocks and shares ISA (minimum investment may apply).

Or, you can invest all your annual subscription into a stocks and shares ISA (minimum investment may apply).

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Q. Is my money safe in an ISA?

A. Cash ISAs are similar to deposit accounts, which means that the money you deposit is safe. What’s more, you won’t pay tax on your savings, so they will grow faster.

And remember, our cash ISAs are fully covered by the Financial Services Compensation Scheme.

If you decide to invest in one of our stocks and shares ISAs, you not only have a tax-efficient way to save but you also have the opportunity to benefit from the potential growth of the stockmarket.

However, the value of equities can fall as well as rise and you may not get back the full amount of your original investment.

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Q. How many ISAs can I have?

A. You can only have one cash ISA and one stocks and shares ISA per tax year.

If you already have a cash ISA with another provider you can choose to transfer your cash ISA to NatWest.

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Q. When does the tax year start and finish?

A. The tax year runs from 6 April until 5 April the following year.

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Q. Can I get access to my money?

A. Yes, you have instant access to your money at any time, whichever ISA you choose.

However, with an Expert Managed Solutions stocks and shares ISA you should be prepared to invest for five years or more and you must withdraw amounts of at least £500 and leave at least £500 in your investment.

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