Who are Yorkshire Bank?
Yorkshire Bank is a trading name of Clydesdale Bank, and the original company dates back to its establishment in West Yorkshire in 1859.
They have a large customer base across the UK and provide various banking services for personal and business clients.
They are now part of Virgin Money UK PLC, a leading UK banking group, so they no longer offer ISA accounts directly themselves.
What is an ISA?
An ISA account is a tax-free savings account that comes in two primary forms:
- Cash ISA
- Stocks and Shares ISAs
Many banks and building societies, like Yorkshire Bank, used to only offer Cash ISAs with fixed or variable interest rates. However, due to low interest rates since the 2007/8 financial crash, many banks now offer Stocks and Shares ISAs as a way for customers to invest in the stock market while getting the benefits of ISA tax-efficiency.
What are the tax advantages of an ISA?
Unlike regular savings accounts, ISAs are entirely immune from the below taxes:
- Capital Gains Tax on the growth of your investments
- Income tax on dividends from your stocks and shares investments
- Income tax on the interest generated from your cash investments
Depending on your income tax bracket and the sources of your earnings, you could pay a significant amount of tax by investing in a standard investment account instead of an ISA. Wrapping your investments in an ISA doesn’t really have any downsides other than a few limitations on what you can invest in, but there’s still plenty of options to choose from.
What can you invest in with an ISA?
Cash ISAs allow you to invest in cash products that generate a variable or fixed rate of interest.
The interest rates you get vary depending on how flexible your ISA account is.
- An instant access Cash ISA usually has lower interest rates, but you can take money out any time, free of charge.
- On the other hand, a fixed-rate Cash ISA locks your investment for a number of months or years. You get better interest rates, but you are charged for withdrawing or transferring during your fixed term.
Stocks and Shares ISAs:
Stocks and Shares ISAs give you access to the entire stock market. Some Stocks and Shares ISA providers manage your investments for you, whereas some allow you to pick your investments yourself.
Here’s a list of the most popular investment choices:
- Managed Funds (Unit Trusts, OEICs and Investment Trusts)
- ETFs (Exchange Traded Funds, or tracker funds)
- Bonds & GILTs
Picking your own ISA investment portfolio can be daunting, but most ISA companies provide research and insight to help you make your decision.
What are the ISA rules?
Before you invest in an ISA, make sure you’re familiar with the key rules of the accounts so you know what you can and can’t do:
- Your annual ISA allowance is £20,000 for the current tax year, meaning you can’t add more than this amount to an ISA
- Your annual ISA allowance is split across all types of ISAs. For example, you could contribute £15,000 to a Stocks and Shares ISA and £5,000 to a Cash ISA, but no more
- You can’t contribute to more than one Cash ISA or Stocks and Shares ISA in the same tax year
- You can contribute to more than one Cash ISA or Stocks and Shares ISA across different tax years
- You can transfer your existing ISAs to different ISA accounts and it won’t count as a contribution towards your ISA allowance
- You do not keep any unused ISA allowance into the next tax year
- Your ISA allowance refreshes every year on 6 April
Who can open an ISA account?
Anybody over the age of 18 who is a UK resident can open an ISA account. If you are under 18, a parent or legal guarding can open a Junior ISA account for you.
How do I open an ISA account?
Opening an ISA is quick and easy. You can do it online via your ISA provider’s website, and you’ll just need to provide some basic personal information.
Once you have set up your account and your online login and password, you’ll need to add money to officially open your ISA.
You can either make a debit card top-up online or over the phone, or you can set up a regular Direct Debit to pay in automatically every month.
You can also open an ISA account in the post with an application form and a cheque.