Tax free saving has become more complex since the introduction of the Personal Savings Allowance (PSA) in 2016, making ISAs no longer the only tax free savings option. We recognise that customers may need help understanding how to save tax free effectively, and why ISAs are still worthwhile.

You can find a lot of useful information in the ISA Season Retail Briefing pack here, and there’s also a quick summary of some of the main points below.

A reminder about the Personal Savings Allowance:

• Basic-rate (20%) taxpayers can earn £1,000 interest per year on any savings without being taxed on it.
• Higher-rate (40%) taxpayers can earn £500 interest per year without being taxed on it.

What’s the customer benefit of using ISAs now (instead of other types of savings accounts)?

The PSA might make customers wonder what the point is of having an ISA, if their interest is tax free regardless of the savings account they choose.  

However:

• Cash ISAs are savings accounts you NEVER pay tax on
• You receive an allowance each year which you can allocate to a new or existing ISA
• Cash ISAs are still especially useful for savers with large pots who have used up (or will use up) the £1,000 tax free interest limit
• If you die whilst holding an ISA, your spouse or civil partner (if you have one) is entitled to an additional ISA allowance, equal to the value of the ISA (even if they don’t inherit the funds).

Indeed – ISAs are a popular choice.  (CACI) data shows that around 30% of UK savings are still held in ISAs (Sept 2019).

We’re approaching the most important time of the year for ISAs

As you’ll know, this time of year is key for YBS to bring in new Cash ISA business. We also want to help customers to make the most of their ISA allowance by topping up their existing ISA accounts before the end of the tax year, if it makes sense for them to do so.

ISAs are easily explained

Cash ISAs are straightforward products, but sometimes it’s helpful to have a nice simple way of introducing a product to customers who are new to them.

That’s why we’ve created our video guide - ‘Getting started with ISA saving’, which should help with your knowledge when talking to customers. You should familiarise yourself with the video, and where appropriate, talk to your customers about it and invite them to watch it in their own time. Please note, the video isn’t for playing to customers.

Click here to watch the video