Who are TSB?
TSB are a popular retail and commercial bank in the UK. The TSB name derives from Trustee Savings Bank, a company in its own right prior to merging with Lloyds in 1995. In 2015, they were acquired by Banco Sabadell of Spain.
TSB offer various banking and financial services, and still operate local bank branches across the company. ISA accounts, specifically Cash ISAs, are among the various financial products they offer to their customers.
What is a TSB ISA?
A TSB ISA account is a completely tax-free savings account.
There are two main types of ISA accounts:
- Cash ISAs
- Stocks and Shares ISAs
TSB’s ISA is a Cash ISA, and they don’t currently offer a Stocks and Shares ISA product.
Cash ISAs provide investors with variable or guaranteed interest rates on their savings in a tax-efficient wrapper.
What are the tax benefits of a TSB ISA?
All ISA accounts are 100% free from tax.
As TSB ISAs are Cash ISAs, this means you don’t have to pay tax on the interest your ISA earns.
In a normal savings account, you have to declare the interest you earn if it’s over your annual allowance, and depending on your other income sources you could be required to pay tax on these savings.
But if you invest in a Cash ISA, you never need to worry about declaring your interest or paying tax on it. Even when you withdraw your funds, you don’t have to pay tax.
What is a TSB Cash ISA?
While Stocks and Shares ISAs give you access to invest in the stock market, your money is always kept as cash in a Cash ISA.
This means that your ISA cannot fall in value and you’ll always get back at least what you originally invest (provided you don’t incur any early withdrawal charges if applicable).
What are the different types of TSB Cash ISAs?
TSB offer a few different types of Cash ISAs, and they vary in the interest they pay and the flexibility of your investment withdrawals.
- Instant access Cash ISAs offer lower interest rates but allow you to access your funds for withdrawals at any time, free of charge. These are great for flexible investing.
- Flexible rate Cash ISAs offer better interest rates than instant access ISAs, but you are penalised for withdrawals. You usually lose the month’s interest that you withdraw in, so they’re not as flexible.
- Fixed-rate Cash ISAs provide the best interest rates out of all of TSB’s Cash ISAs. However, you are locked into a fixed term of 18 or 24 months. If you withdraw before the end of your term, you will incur more significant charges and it could outweigh the preferable interest rates you were getting.
What are the Cash ISA rules?
Here’s a list of the key rules to be aware of before you invest in a TSB Cash ISA:
- You can only invest up to £20,000 in the current tax year in ISAs
- This annual allowance includes any Stocks and Shares ISA contributions you make too
- You can have multiple Cash ISAs, but you can only add money to one Cash ISA per tax year
- You cannot have a joint Cash ISA, and nobody else can put money into your ISA
- You may be charged for withdrawing depending on the type of interest your Cash ISA offers (see above)
- You can transfer ISAs between providers and it won’t count towards your ISA allowance
- Your ISA allowance doesn’t roll over, so you lose any of your allowance you don’t use
- Your allowance refreshes every tax year, but HMRC sometimes changes the annual allowance
Who can open a TSB ISA account?
Anybody can open a TBS Cash ISA as long as they are over 18 and a UK resident.
How do I open a TSB ISA account?
The quickest and easiest way to open a TSB Cash ISA is online through the website. You can open an account in a matter of minutes, and you’ll just need to supply some basic personal information and make a contribution.
You can make your contribution either via a debit card payment or by setting up a Direct Debit regular payment.