Skipton ISA (A complete review)
By
HuutiMoney
In this brief guide, we are going to be discussing the Skipton ISA.
In this post, we are going to introduce you to the world of the Skipton ISAs, their best use case and all you need to know about the specific ISAs.e.g which one can help you get on the property ladder or help you save for retirement.
What is the Skipton ISA?
The Skipton ISA(Individual savings account) is a tax-effective way to save. ISAs allow you to pay no tax or the minimum tax on the interest you make on your savings.
To be eligible for an ISA you will usually have to be:
- You must be at least 16 years old
- You must be a UK resident
- And you must have not subscribed to another UK ISA in the same category in the same tax year
So, you are probably wondering what does “subscribing to an ISA” mean. Subscribing to an ISA means paying into and opening an ISA. You are allowed to subscribe to one of each type of ISA every tax year and you must not exceed your ISA allowance each tax year.
How Many ISAs Can I have?💶🙌🏻
The current tax rules allow you to have or open one of each type of ISA every year but you can only put the maximum tax year ISA allowance in all of these ISAs. This means your combined savings in all your ISA accounts must not exceed your current tax year ISA allowance for the current year. The tax year ISA allowance is currently £20,000.
Can I open a cash ISA AND A LISA in the same year?
Yes, you can open a cash ISA and a LISA in the same year. You can also contribute to a cash ISA and LISA in the same year as long as you don’t go over your personal ISA allowance. You can out whatever you have left in other ISA accounts in the same tax year.
How many Skipton ISAs can you open in one year?🔔❄
You can have multiple Skipton ISAs but not more than one of the same( e.g you can’t have two Skipton cash ISAs) and your total Tax year ISA allowance must not be exceeded in your combined ISA contributions. This means ISAs you hold with Skipton and ISAs you hold with other providers. Each ISA may also have its maximum contribution limit as well. So check the terms.
What to do if you open more than one type of Skipton ISA?😮ℹ
Although it is very unlikely, if you mistakenly open more than one lifetime or stocks & shares ISA in a single tax year, you should notify your Skipton ISA manager at the earliest opportunity. In some cases, the ISA may be allowed to remain open, once you have consulted with HM Revenue and Customs.
The rules for stocks and shares ISAs are the same as with cash ISAs. You can only pay into one each tax year but can open a new ISA with a different platform each year if you wish to. This means you may be able to further diversify by having one type of Skipton ISA and opening the same type of ISA with a different provider in the next tax year. Contribution rules will still apply.
If you have multiple stocks and shares Isas open, you are only allowed to pay into one of them in each tax year. So, if you only wanted to invest a portion of your Isa allowance via the second Isa provider, this could be difficult as it will mean you are not able to add any new money to the original Isa in the same tax year.
The only other option to consider is transferring your existing portfolio to the other provider, although this might incur some costs.
How do ISA transfers work?🌟✈
ISAs are tax-free saving wrappers and moving them to get a better deal is common. If you move your ISA in the wrong way you could just end up losing your tax-free status and costing you interest made from your ISA. If you want to move your ISA to a Skipton ISA you should contact the Skipton ISA manager.
Why should you transfer your ISA?🌈ℹ
You could transfer your ISA for a variety of reasons such as getting a better rate or because of reasons such as the cost of your current ISA manager or their performance.
You might also be transferring all your ISAs to a new manager to have all your savings in one place or rather move all your savings to different places in a scenario where your combined savings are over the financial services compensation scheme limit of £85,000 per account.
There are a variety of ISA providers out there and you can view their various offerings, including the way they invest, their past returns etc all online so you have an idea of which provider you want to move your money to.
To transfer an ISA you simply open a new ISA account(in this case a Skipton ISA ) then fill an ISA transfer form and send to your old ISA manager. It’s that simple. Once the transfer is done you will get a closure statement showing exactly how much you have transferred.
Be sure to be on the lookout for any charges or transfer out fees imposed by your current ISA manager.
How long does your ISA transfer take?👀
This depends on what ISAs you are transferring. If you are transferring a cash ISA then this should take 15 days. If you are transferring a stock and shares ISA then this will usually take 30 days.
If your ISA transfer takes too long you can report it to the Financial ombudsman.
Which ISAs can you transfer?❄⌛
You can transfer any ISA although there might be some penalty for ISAs which are fixed-term or notice ISAs. Some ISA providers do not accept ISA transfers.
If you have a notice ISA, it is probably best to give notice to your current ISA provider to avoid any charges.
If you choose to proceed without giving notice then you should compare how much interest the new ISA will earn you and the cost of the penalty. If you still make more money by transferring your ISA then, by all means, transfer your ISA if you wish.
The Skipton ISA is covered by the financial services compensation scheme. This means you are covered by up to £85,000 per account in case anything goes wrong with your Skipton ISA.
The majority of Skipton ISA products are cash ISAs
Skipton Cash ISAs
The Skipton Cash ISAs are just like saving accounts which pay interest.The interest they pay is tax free and outside of your personal allowance. Cash ISAs will usually pay a fixed rate of interest or a variable rate.
The personal savings allowance which gives you £1000 tax free depending on your tax band. This means basic-rate (20%) taxpayers will be able to earn £1,000 interest with no tax while higher-rate (40%) taxpayers – will be able to earn £500 interest with no tax. Additional rate (45%) taxpayers don’t get a tax-free allowance.
To open a Skipton cash ISA you will have to be:
Over 18 years old
A Uk resident for tax purposes
Be a crown employee serving overseas
Or be married or in a civil partnership with a Crown employee
A Skipton Cash ISA can be easily opened online, in app or via post. The maximum you can put in them is your personal tax allowance which currently stands at £20,000.
You can also transfer funds from an old ISA account into your Skipton ISA account.
To open the Skipton cash ISA account you will need a minimum of £1 and you can then go on to contribute up to your maximum ISA allowance of £20,000 taking into consideration any other ISA contributions you may have made that tax year.
You can manage your Skipton cash ISA account online by phone or via the Skipton app.
You can make as many withdrawals from your Skipton cash ISA account but you can only put back the amount left in regards to your maximum annual contribution.
You can cancel this account within 14 days of opening it.
Cash ISAs are usually considered a safe investment vehicle. They are covered by the financial services compensation scheme up to £85,000 per account.
Types of Skipton ISA
The Skipton Easy Access ISA
The Skipton cash lifetime ISA
The Skipton stocks and shares ISA (This ISA is beyond the scope of this guide)
The Skipton fixed rate ISA
The Skipton fixed rate ISA is a type of Skipton ISA which allows you to earn a tiered level of interest based on how long you save for.
Skipton says its fixed-rate ISA may be right for you if:
“ you have a lump sum to invest
you want a fixed rate of interest that’s guaranteed for the fixed term
you want to be able to transfer in ISA savings from current or previous tax years
you don’t want to continue to pay in or request ISA transfers in after the first seven days of the account opening. “
All Skipton fixed rate ISAs have a minimum of £500 as an initial investment.
The different tiers are:
1 Year Online Fixed Rate Cash ISA Issue 96 – No withdrawals. Early closure subject to 120 days’ interest penalty -1.25% to 1.35% tax-free pa/AER fixed -Dependent on the account balance
2 Year Online Fixed Rate Cash ISA Issue 96 – No withdrawals. Early closure subject to 180 days’ interest penalty -1.25% to 1.35% tax-free pa/AER fixed- Dependent on the account balance
3 Year Online Fixed Rate Cash ISA Issue 96 – No withdrawals. Early closure subject to 240 days’ interest penalty -1.25% to 1.35% tax-free pa/AER fixed. Dependent on the account balance
5 Year Online Fixed Rate Cash ISA Issue 96 – No withdrawals. Early closure subject to 365 days’ interest penalty – 1.25% to 1.35% tax-free pa/AER fixed. Dependent on the account balance
Skipton Easy access ISA
The Skipton Easy access ISA is a type of Skipton ISA which allows you to have easy access to your money without any penalties.
Skpton says the Easy access ISA may be good for you if “ you’d like easy, flexible access to your money without affecting your ISA allowance
you want to be able to transfer in ISA savings from current or previous tax years. “
The minimum balance to open Skipton easy access ISA is £1. The rates on this ISA are variable so they may change at any point.
eISA Saver Issue 1 – Flexible withdrawals permitted – 1.00% to 1.30% tax-free pa/AER variable. Dependent on the account balance
Skipton cash Lifetime ISA
The Skipton cash Lifetime ISA is a type of Skipton ISA and is for first-time buyers looking to get on the property ladder or those looking to save for retirement. If you withdraw any money from your Skipton lifetime ISA for any other purpose other than this you will be charged a 25% penalty.
The interest rate on this account is 1.00% tax-free pa/AER variable (Variable). This interest rate is calculated daily and paid annually on the account opening anniversary.
As the interest rate on this Skipton cash Lifetime ISA is variable, this means that the Skipton can change the rate of interest on this ISA account at any time.
You can open this account online or in branch and give any instructions for the account online, by phone or by post.
To open this account you will need a minimum balance of £1 which is also the minimum balance needed for you to be eligible for the government bonus.
You will also need to be between 18 and 40 years old, reside in the uk
Be a Crown Servant (for example a diplomat or civil servant)
Or the spouse or civil partner of a Crown Servant
The lifetime ISA scheme is a government scheme which helps first-time buyers get on the property ladder or people save for retirement.
Who qualifies as a first time buyer?
A first time buyer is someone who does not own any property in the World. This includes property in a will, trust or as a result of a divorce.The maximum house price you can purchase utilizing the Skipton cash Lifetime ISA is £450,000. You can purchase a property with someone else on a Lifetime ISA but the maximum property price does not double.You can also use the Lifetime ISA with other First time buyer schemes such as the Help to buy equity loan scheme.
Can I open my Skipton cash Lifetime ISA with other ISAs?
Yes you can as long as you don’t exceed your current ISA allowance for the tax year which currently stands at £20,000. You can however not use the bonus for both when purchasing a home. You will have to pick which one you use to buy a new home and any funds withdrawn from the other ISA product will incur a withdrawal penalty.
When can I withdraw money from my Skipton cash Lifetime ISA?
You can withdraw your money before the age of 60 as usual although you will face a Government withdrawal penalty of 25% or you can withdraw it when buying a first home under £450,000 without any penalty. The property must be a mortgaged property and you can only utilize the Lifetime ISA 12 months after opening it with your solicitor acting on your behalf to ensure your Lifetime ISA bonus is activated and Lifetime ISA account is closed without any penalty. If your property purchase is taking more than 90 days you can contact HMRC for an extension.
If you fail to buy a property you can return all the funds and the interest missed will be paid and it will not be classed as a withdrawal.
You can of course always withdraw your money after age 60 and above with no penalty whatsoever.
A withdrawal charge won’t apply if you’re:
- using it towards a first home
- aged 60
- terminally ill with less than 12 months to live
- transferring to another Lifetime ISA with a different provider
- If you die, your Lifetime ISA will end on the date of your death and there won’t be a withdrawal charge for withdrawing funds or assets from your account.
How is the Government bonus paid on my Skipton cash Lifetime ISA?
The Government bonus will be paid monthly and this will allow you to earn more interest on the cumulative deposits.
You cannot contribute to your Skipton cash lifetime ISA one you turn 50.
The information provided on this page about the Skipton ISA is accurate at the time of writing. You should check with the Skipton ISA website as some of the information on this page may have changed.
If you have any questions or comments please let us know.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.