ISAs (Individual Savings Accounts)

Annual Equivalent Rate (AER) illustrates what the interest rate would be if paid and compounded each year.

Gross is the interest rate paid before tax is deducted.

Variable means the interest rate can change over time. This means the rate can go up or down based on factors like the Bank of England’s base rate changing.

This means the amount of interest you could earn may increase or decrease throughout the time you hold your account.

The term is the length of time you commit to locking away your savings, as well as the length of time you have a guaranteed fixed interest rate.

Maturity refers to your account reaching the end of your chosen term. This is when you can choose to access your savings or move them to another account.

Like our other savings accounts, funds in an ISA may be protected by the Financial Services Compensation Scheme (FSCS). This scheme is an independent body and it’s free to consumers.

Your eligible deposits held by Barclays Bank UK PLC, trading as Tesco Bank, are protected up to a total of £85,000 per person if the bank goes out of business. This limit is applied to the total of any deposits you have with the following: Barclays, Barclays Business Banking, Barclays Premier Banking, Barclays Wealth Management and Tesco Bank.

When you earn interest from a savings account that isn’t an ISA, it will count towards your Personal Savings Allowance.

This doesn’t mean you’ll pay income tax on the interest you earn (most people can earn some interest from their savings without paying tax, source: HMRC “Tax on Savings Interest” 16/09/2024) but it could if the amount of interest you earn goes beyond your Personal Savings Allowance.

The Personal Savings Allowance depends on what rate of income tax you pay:

If you’ve been saving in an ISA, the interest you earn won’t contribute to your Personal Savings Allowance. You can learn more about how ISAs work.

Tesco Bank won’t deduct tax from the interest you earn. The tax rules set by HM Revenue & Customs are subject to change, and the value of tax benefits depends on your individual circumstances.

There’s no limit to how much money can be held in an ISA, though there is a limit to how much you can pay into your ISAs during each tax year. The tax year runs from 6 April to 5 April.

ISAs allow you to deposit up to £20,000 for the current tax year, this can be split across all different ISA types. Junior ISAs have a lower limit, with a maximum of £9,000 for the current tax year.

You can transfer funds saved in previous tax years without counting towards your annual tax-free ISA limit, even if it exceeds £20,000.

This depends on the provider and the type of ISA you have.

With Tesco Bank:

If you want to move your money to another ISA provider, you can do this using the ISA transfer process, which allows you to transfer funds without losing your tax-free benefits.

Some providers will move your funds to an ISA with a variable rate if you haven’t provided an instruction. Our Fixed Rate Cash ISA automatically becomes an Instant Access Cash ISA, unless you tell us otherwise.