Introducing the Newcastle Cash Lifetime ISA

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What is a Cash ISA?

Just like a savings account, a Cash ISA (Individual Savings Account) is a safe, secure way to store your money. The only difference is that any interest you earn on your savings is tax-free.

What are the benefits of an ISA?

There are many reasons to opt for a Cash ISA over alternative savings accounts. Not the least of these, is that they’re a great way of saving for your future. Other benefits include:

  • Currently, all basic rate taxpayers can earn £1,000 of tax-free savings interest per year, under the Personal Savings Allowance (PSA). However, there is no guarantee that this won’t change in the future. With ISAs, you’re guaranteed your savings will always be tax-free. Investing your allowance each year means you can grow your savings without having to pay any tax.
  • If you were to opt for an alternative regular savers account and savings interest rates increased, the money you’d saved may tip you over the Personal Savings Allowance limit.
  • Some types of Cash ISA come with the added benefit of government boosting. For example, the 25% government bonuses offered with Help to Buy ISAs and Lifetime ISAs. 

Are ISAs tax-free?

Yes, with a Cash ISA you can rest assured your savings are not only tax-free, but safe from changing regulations.

The only time when a Cash ISA isn’t exempt from tax is if you are aged 16 or 17 years old, and the money in your account is a gift from a parent. If this is the case, your parents may have to pay tax if parental settlement rules apply.

Cash ISA rules

  • To be eligible for a Cash ISA, you must be aged 16 or over and a UK resident. The only exception to this is in the case of Lifetime ISAs, that require you to be 18 years old
  • You can only open one Cash ISA per year
  • You have a single ISA allowance each year, which you can divide between a Cash ISA, a stocks and shares ISA, an Innovative Finance ISA and/or a Lifetime ISA. With a Lifetime ISA, the maximum allowance is £4,000 each year, meaning you have up to £16,000 to split between the other types

How much can I put in an ISA?

The total amount you can put into a Cash ISA for the 18/19 tax year is £20,000. This is known as the ISA allowance and is available to every person over 16 in the UK. You have the choice of using up the maximum allowance in one account, or splitting between the different types of ISA products.

Any interest your ISA earns doesn’t count towards your Personal Savings Allowance.

When is the ISA deadline?

The ISA deadline is midnight on 5th April each year; this is the end of the tax year. Any unused allowance doesn’t roll over into the new tax year, so you should try to make the most of your allowance before the deadline comes around. For more information on the ISA deadline, refer to our ISA deadline guide.

What are the different types of Cash ISA?

There are a number of different Cash ISAs available to help you achieve your savings goals. Whether you’re saving for your first home or setting up a nest egg for your golden years, there’s an option to suit you.

Fixed Rate ISAs

A Fixed Rate ISA pays a guaranteed amount of interest for a set period of time, from six months to five years. Though withdrawals are permitted, they’re subject to penalties. Consequently, a Fixed Rate ISA is better suited to those who won’t need immediate access to their savings.

Help to Buy ISAs

A Help to Buy ISA is a government scheme designed to help you save for a mortgage deposit on your first home. To qualify, you can’t own a property anywhere in the world.

You can save up to £200 a month in a Help to Buy ISA, and they come with the added bonus of government contributions. In this case, your savings could be boosted by 25%. The minimum government bonus is £400, so you will have to have saved at least £1,600 to qualify for a government bonus.Please note, Help to Buy ISAs are due to be withdrawn in November 2019.

Lifetime ISAs

A Lifetime ISA is a tax-free savings account that also offers a government bonus of 25% on top of the money you put in, up to a maximum of £1,000 a year. With a Lifetime ISA, you can deposit as much as £4,000 per year until the age of 50. Lifetime ISAs can only be opened and funded by those aged 18 to 39.

Junior ISAs

Junior ISAs are tax-efficient ways of saving for your little one’s future. You must be 16 or over and a UK resident to open a Junior ISA on behalf of a child, or be a child aged 16 to 18 to open one for yourself. The Junior ISA allowance for 2019/20 is £4,368.

Find everything you need to know about Junior ISAs here.

Refer to our Cash ISA page to discover the full range of ISAs available with Newcastle Building Society.

How many ISAs can I have?

You can have multiple ISAs at one time, but you can only open or pay into one of each type of ISA using your £20,000 allowance. 

Though you can only open one Cash ISA each tax year, there’s no limit to the number of ISA transfers you can make, should you spot a better interest rate with another provider. However, with Newcastle Building Society, you can open multiple cash ISAs using our CustomISA service. You can find more about that here.

What happens if I take money out of my ISA?

Withdrawals are permitted from most ISAs. However, if you make a withdrawal from a Fixed Rate ISA, you will be subject to a penalty in the form of a loss of interest on your savings.

If you think you will need access to your savings quickly, then you may be best suited to an ISA that doesn’t penalise withdrawals.

In relation to the Lifetime ISA a penalty of 25% of the withdrawal amount will be deducted unless the funds are being used for either:

  • Buying your first house (the account must have been held for a minimum 12 months)
  • You reach the age of 60
  • You are diagnosed with a terminal illness and have less than 12 months to live

Can I transfer my ISA to another provider?

You are permitted to unlimited transfers each tax year. However, you should always check that your new provider accepts transfers, as not all banks and building societies are obliged to do so

Avoid withdrawing money from your ISA yourself, as your savings may lose their tax-free status!

There are a number of reasons you may want to transfer to a new provider. For example, if you’ve spotted better rates elsewhere. Read our complete guide to the ISA transfer process for more information.

Can I inherit an ISA?

If your spouse or civil partner passes away, you will be eligible to receive an Inheritance ISA Allowance. Read more information about inheritance tax allowance in our helpful inheritance tax allowance guide.

Applying for a Cash ISA with Newcastle Building Society

If you'd like to apply for a Cash ISA at Newcastle Building Society, the process is really simple. We also accept ISA transfers, including Lifetime ISAs. To get the ball rolling, simply browse our Cash ISA product range or contact us.​

Introducing the Newcastle Cash Lifetime ISA

Let Newcastle Building Society help you save smart for your first home or retirement, boosting your savings with a UK Government-backed bonus of 25% - tax free, plus interest.

Available for 18 to 39 year olds to open, a Lifetime ISA (LISA) enables you to save up to £4,000 tax-free each year, which is topped up by the Government’s 25% bonus, up to your 50th birthday.

What’s the catch? You will only receive the Government’s 25% bonus if you go on to use the savings in your LISA towards the deposit on your first home and/or towards your retirement. If you make a withdrawal not connected to these two events then a 25% penalty will apply to the amount you withdraw. This will recover the Government’s bonus and you will get back less than you have saved.

For those saving to buy their first home, you must be saving for over 12 months to use the funds. If you are saving for retirement then you’ll be able to access your savings penalty free upon your 60th birthday.

Your LISA limit forms part of your overall ISA limit. The Newcastle Cash Lifetime ISA is managed online, by telephone or post. You must apply for the account online and have a minimum opening deposit of £1.

It’s OK to change your mind – you are able to cancel the account within 30 days of the opening date without incurring any penalties.

 

How the Government bonus works

HMRC calculate bonus payments from the 6th of the month to the 5th of the following month based on what you’ve paid in.

Your bonus is paid into your account within 14 days of the 20th day of the following month. Interest is paid by Newcastle Building Society on an annual basis.

The LISA is a long-term savings product designed to incentivise saving towards your first home and/or retirement. If you withdraw for any other reason (excluding terminal illness with less than 12 months to live or death) you will incur a charge of 25% on the total funds - recovering the Government bonus, plus an extra charge penalising you for the withdrawal.

You can transfer your LISA to another LISA provider without incurring the withdrawal penalty. We accept LISA transfers into the Newcastle Cash Lifetime ISA - these must be transferred in full and proceeds are made up of cash only. 

As the LISA is a Government savings scheme, it may be subject to change. This account is covered by The Financial Services Compensation Scheme.

To find out more about the Government’s Lifetime-ISA scheme, visit lifetimeisa.campaign.gov.uk.

Looking for something more flexible?

We offer a range of saving options, covering a range of needs. Check out our account types here.

Find out more


A step closer to your first home

For over 150 years Newcastle Building Society has been committed to helping people in our communities own their homes.

A UK Government backed ISA through Newcastle Building Society is one of the best ways to save for the deposit needed to secure the home of your dreams.

What you need to know:

Eligibility

  • You must be 18 or over but under 40 years old when you open and make the initial investment to your Lifetime ISA account.
  • You must be a UK resident, unless you or your spouse/civil partner is serving overseas for the UK Crown.
  • You must be a first-time buyer.
  • The property must be purchased in the UK.
  • Your property must be purchased through a residential mortgage (i.e. not Buy to Let).
  • You must occupy the property as your main residence.
  • You’ll need to make your initial deposit or transfer your existing LISA within 30 days of account opening – we’ll email you confirmation of this. Please note you must be under 40 years old at the time we receive your initial deposit. (Unless you are transferring an existing Lifetime ISA from another provider).

Conditions:

  • Your new home must not exceed the value of £450,000.
  • You can own more than one LISA. You can only open one Lifetime ISA per tax year,
    and put money into one LISA per tax year.
  • If you’re buying with someone else who is also a first-time buyer you can each open your own LISA.
  • If you have a Help to Buy and LISA, you can only use one bonus towards your house purchase.

Not sure if this account is right for you?

First time buyers who save with Newcastle Building Society have the option of two Government savings schemes. However, the Government bonus can only be claimed on one of these schemes. The table below outlines the difference between the two to help you make the right choice. Find out more about our Help to Buy ISA.

Find out more

 

An extra boost for later life

Putting away funds now for your future with the Newcastle Cash Lifetime ISA.

The potential of a LISA means that an 18-year-old saving £77 per week until their 50th birthday can earn the maximum £32,000 Government bonus.

You may have a change of heart and no longer wish to save for your first home, your savings could then be used for later life. Maybe a once-in-a-lifetime trip to tick off your bucket list, or a healthy nest egg to complement a pension pot, saving now will ensure you make the most out of your later years.

What you need to know, if you’re saving for retirement

Eligibility

  • You must be 18 or over but under 40 years old when you open and make the initial investment to your LISA account.
  • You must be a UK resident, unless you or your spouse/civil partner is serving overseas for the UK Crown.
  • You’ll need to make your initial deposit within 30 days of account opening – we’ll email you confirmation of this. Please note you must be under 40 years old at the time we receive your initial deposit.

Conditions:

  • You’ll be able to access your LISA savings penalty free after you turn 60.
  • You can pay into your LISA up until your 50th birthday, at this point you’ll continue to earn interest but you’ll not receive any additional Government bonus.

Important

You should consider if saving in a cash LISA is the right option for saving towards your retirement. If you are employed, you should consider the potential availability of a workplace pension scheme through an employer which provides employer matched contributions, and your tax position. If you save in a LISA instead of enrolling in, or contributing to, a pension scheme from your employer or personal pension scheme:

  • You may lose the benefit of contributions by an employer (if any) to that scheme; and
  • Your current or future entitlement to means tested benefits may be affected (these depend on the amount of income and capital you have, which includes savings).

Find out more

 

Open your account today!

You can apply online for each of our savings accounts - simply follow the links at the bottom of each product page. If you would like to find out more about our full range of savings accounts or make an application in person, book an appointment at your local branch.