Compare Bank of Scotland ISAs

Who are Bank of Scotland?

Bank of Scotland are one of the oldest Banks in the UK, and their history dates back to 1695.

They have been a subsidiary of Lloyds since 2009, and today operate a range of financial services from retail to private banking.

They offer a range of ISA accounts varying from Cash ISAs to Stocks and Shares ISAs, giving customers a healthy selection of tax-efficient savings options to choose from.

What is an ISA account?

ISAs are a type of tax-efficient savings account.

The ISA Basics:

1. You are allowed to contribute up to £20,000 to ISAs in the current year.
2. This ISA allowance refreshes each year so you can keep topping up your ISA.
3. There are two main types of ISAs: Cash ISAs for cash savings, and Stocks and Shares ISAs for stock investments.

ISA Tax Benefits:

1. Any interest you earn in a Cash ISA is 100% free from income tax.
2. Any dividends you earn from a Stocks and Shares ISA are 100% free from income tax.
3. You don’t need to pay capital gains tax on the growth of your Stocks and Shares ISA when you sell your holdings for a profit.

What is the difference between a Cash ISA and a Stocks and Shares ISA?

Cash ISAs keep your money invested solely in cash, and you earn interest on the balance of your account.

Stocks and Shares ISAs allow you to invest your money in the stock market and you can get dividends and growth returns on your investments.

Cash ISA Basics:

• Your investment cannot decrease in value.
• You can get a fixed or variable rate of interest on your savings.
• Fixed interest rate products provide higher returns, but you must commit to a term of 1 to 5 years before you can withdraw without being charged.
• Variable interest rate products have lower returns, but you can usually withdraw money at any time.
• Withdrawing early from a fixed Cash ISA results in you losing a portion of your interest or being charged.
• Ongoing low interest rates in the UK means that Cash ISA returns are very limited.

Stocks and Shares ISA Basics:

• You can invest in the stock market in shares, funds and ETFs.
• You can either pick investments yourself or choose a ready-made ISA portfolio that is managed for you (often the more expensive option).
• Annual management charges apply.
• You have the potential for higher returns compared to Cash ISAs, but the value of your investments can go down as well as up, - you could get back less than what you originally invested.
• Withdrawals are usually permitted at any time from a Stocks and Shares ISA.

What type of Cash ISA does Bank of Scotland offer?

Bank of Scotland have two Cash ISA products on offer – a variable-rate Cash ISA and a fixed-rate Cash ISA.

BoS’s variable ISA:

1. Interest rate can vary
2. Unlimited free withdrawals
3. Lower rates than the fixed-term ISA

BoS’s fixed ISA:

1. Guaranteed interest rate return
2. Higher rates than the variable option
3. No withdrawals permitted, and you are charged for closing or transferring your account early

What type of Stocks and Shares ISA does Bank of Scotland provide?

1. Bank of Scotland ready-made ISA portfolios:

• Invest in a managed, ready-made stock portfolio, controlled by qualified investment professionals.
• Choose a portfolio based on your attitude to risk, from cautious to adventurous.
• With this investment method, you get a diversified ISA portfolio managed daily by professionals, but you’ll pay higher charges compared to if you pick funds and shares yourself.

2. Bank of Scotland self-select ISA:

• Better if you are a more experienced investor comfortable with making your own investment decisions.
• Choose from shares, funds, ETFs and other investment products.
• You’ll usually pay dealing charges for purchasing your investments.
• You’ll likely pay lower fund charges than you would with a ready-made ISA depending on the assets you choose within your own specific portfolio.

How do I open a Bank of Scotland ISA?

The easiest way to open a Bank of Scotland ISA is online, and there are three ways you can make your first contribution to invest:

1. Debit card payment
2. Direct debit regular contribution
3. ISA transfer

If you transfer an existing ISA into a Bank of Scotland Cash or Stocks and Shares ISA it won’t count towards your annual ISA allowance.

You can only add £20,000 of new money to ISAs in one tax year, but you can transfer as many existing ISAs to a new account as you like.

To do so, speak to Bank of Scotland or your new ISA provider to request an ISA transfer form to get the ball rolling.

Make sure to check with your existing ISA provider(s) as to whether you’ll be charged for transferring out or selling down your assets to transfer.