ISAs Explained

 

ISA stands for ‘Individual Savings Account’, a tax efficient way to save/invest money. There are several types of ISAs available. The Vernon only offers Cash ISAs.

What is a Cash ISA?

A Cash ISA is a savings account where interest is tax free. It is available to UK residents age 16 and over. You can invest in one Cash ISA product per year.

Does the new Personal Savings Allowance make ISAs less attractive?

Interest on non ISA savings accounts is paid without tax deducted but may still be liable to income tax. The Personal Savings Allowance (PSA) means that basic rate taxpayers can earn £1,000 of savings interest a year without having to pay any tax on it.

This may seem a lot, however a combination of future interest rate rises and savings accumulation may push your non-ISA savings interest beyond the £1,000 allowance giving you a tax bill. Interest from cash ISA savings is tax-free and independent of your PSA so we recommend that you always save into an ISA before other account types.
 
How much can I invest?

ISAs are subject to an annual subscription limit of £20,000 per tax year. This allowance can be shared between the different types of ISA that are available, such as cash and stocks and shares.

If you don’t make the maximum subscription in one tax year, the balance cannot be carried forward into the next one.

The Vernon offers flexibility on most of its ISA accounts which means any withdrawals from your ISA can be replaced in the same tax year without affecting your allowance. This flexibility applies to previous year’s deposits as well as the current year. Many other providers do not provide this flexibility so be sure to check this if investing elsewhere.
 
For example:

Jeff has £20,000 in his cash ISA, made up of £15,000 saved from previous years and £10,000 in deposits this tax year. His outstanding ISA allowance for this year is therefore £10,000. Jeff withdraws £15,000. He is now able to deposit a total of £25,000 into his ISA this tax year: the £10,000 he took out, plus the remaining £10,000 allowance.
 
Can I transfer my ISA with another provider to the Vernon?

Yes you can. To do this please talk to a Customer Adviser in your local branch.
 
How do I open a Cash ISA?

Simply by calling in or telephoning your local branch. You will need to provide us with your National Insurance number and confirm whether you have subscribed to another Cash ISA during the tax year. We will also require proof of your identity.
 
Why do I need proof of identity?

The law demands it in order to protect the saver and to prevent fraud. For us to do this you will need to provide us with evidence (such as your passport, driving licence, utility bill or council tax bill) and we will then undertake an electronic identification search against records held by a credit reference agency.
 
How can I cancel my application?

You will have 14 days from receipt of your passbook in which to change your mind and request cancellation of your investment in writing only. Your cancelled ISA will not count as an ISA subscription. Interest will be paid gross during the cancellation period.
 
How do I transfer my Vernon ISA to another provider?

If you choose to transfer your ISA in full or in part to another provider you will need to fill in an application form with them. They will then communicate with us to arrange the transfer.
 
To see the range of Cash ISAs that we currently offer, visit our Cash ISA Accounts page.