NatWest ISA Guide – Video Transcript
Chapter 1
"What is an ISA?"
An ISA is an Individual Savings Account that lets you pay little, or no tax on the interest you earn.
So with an ISA, you could get more than with other savings accounts.
There are different types of ISA, each with their own benefits.
Firstly there are cash ISAs which allow you to earn tax free interest on your savings. These come in two forms;
[On screen text: Tax-free interest is exempt from UK income tax]
Variable Rate cash ISAs could be a good place to start because they normally give you instant access to your money and you can make regular deposits. This means that you can build up your tax-free savings over time.
Or if you are prepared to leave your money untouched for a while then a Fixed Rate cash ISA will give you a great fixed interest rate over a period of one, two or three years.
If you do need to access your money then you can close your Fixed Rate cash ISA, but there is an interest charge when you do this.
Finally, stocks and shares ISAs allow you to put your money into a wide range of investments or shares.
So if you’re prepared to invest for at least five years you could enjoy higher levels of growth.
But be aware their value and any income from them, can fall as well as rise so you may not get back the full amount you invest.
Chapter 2
"How much can I save?"
An ISA lets you save tax efficiently, but there is a limit on the amount of money you are allowed to put in.
For the current tax year which ends on the 5th April, the maximum you can save is £11,280.
You can put all that money in a stocks and shares ISA or you can put up to £5,640 of it in a cash ISA and put the remainder of the £11,280 allowance into a stocks and shares ISA.
The amounts you invest in each are flexible as long as you don’t exceed these limits.
Chapter 3
"How can I transfer my ISA?"
If you wish to transfer your ISA, the first thing to do is get a transfer form from your new ISA provider and fill it out.
It’s important that you don’t take the funds out of your existing ISA to put into your new ISA yourself, but use the transfer form.
The type of ISA you have and whether it dates from previous or the current year’s ISA allowance, will determine where you can transfer it.
You can transfer into a stocks and shares ISA from a cash ISA, but not the other way around. If you decide to transfer into a stocks and shares ISA, you need to be comfortable with a potentially greater level of risk. For any transfer, check if there are any associated charges or penalties.
You can transfer some of your previous years’ allowance or all of it, into new ISAs. You should first check with your existing ISA provider as to whether they allow partial transfers.
When transferring a previous year’s allowance, you are also allowed to split your funds into more than one new ISA.
However, if you are transferring funds from your current year’s allowance you cannot split them and must transfer the full amount you have saved.
Transferring a cash ISA from another ISA provider takes around 15 days.
You will earn interest as soon as the account with your previous ISA provider is closed.