Changes to ISAs
From 6 April 2016 there are two changes to how ISAs are provided:
1. New ISA rules - additional flexibility
2. The new innovative finance ISA
ISAs are Individual Savings Accounts where your interest is paid tax-free up to a set limit each tax year. The best way to think of them is as wrappers you can use to shelter savings and investments from tax.
1. ISA rules – additional flexibility
The government has introduced a new optional feature on ISAs; additional flexibility may be offered from 6 April 2016.
Normally, any money you pay into your ISA counts towards your annual ISA allowance (£15,240). With the additional flexibility you can replace withdrawals without the replacement counting towards your ISA allowance. You’ll need to pay the funds back in before the end of the tax year you take them out though.
From 6 April 2016 Santander ISAs will continue to work as they do today, we won’t be offering the additional flexibility.
If your provider chooses to offer flexibility it will apply to both current tax year and previous tax year ISA subscriptions. If you’re not sure if your ISA has this feature please check with your provider.
For further information on additional ISA flexibility click here
2. Innovative Finance ISAs
From 6 April 2016 you can save up to the annual ISA allowance (£15,240) in a cash ISA, a stocks and shares ISA, an innovative finance ISA or any combination of the three. However you can only subscribe to one of each type of ISA each tax year.
The innovative finance ISA is a new type of ISA to let savers shelter peer-to-peer lending in an ISA wrapper. (Peer-to-peer lending is when savers lend to borrowers, usually through a platform.)
Santander doesn’t offer peer–to-peer lending and therefore won’t be offering an innovative finance ISA.
We offer a range of products that have different features and benefits and are described on this website. We provide you with this information to help you decide which account is right for you. We do not offer advice on our accounts.
From 6 April 2016, all interest payments received will be paid gross, even if this is for interest accrued before this date.
If you receive monthly or annual interest, any interest payments you receive before 6 April 2016 will be paid net, unless you’ve registered for gross interest.
Interest from ISAs will still be paid tax-free, it just won’t count towards your Personal Savings Allowance. For example, if you get £500 in ISA interest, and you’re a basic-rate tax payer, you’ll still have £1,000 of Personal Savings Allowance to cover other interest.
With Santander each individual receives a Personal Savings Allowance based on their tax status which they will use against their equal share of the interest. If you hold joint accounts with other providers you’ll need to check this with them.