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Guide to opening an ISA

An Individual Savings Account (ISA) is a tax-efficient way to save and invest your money. Any money you save in an ISA is tax-free, meaning that any interest you earn will not be taxed.

Discover how to open an ISA and more in this helpful guide.

What do I need to set up an ISA?

To set up an ISA with Sainsbury’s Bank, you will need to supply your:

  • Address and postcode from the last three years
  • Your National Insurance number and/or Tax Identification Number(s) (for non-UK tax resident).

To apply you will also need:

  • A personal telephone number and email address
  • You will also be prompted to register for online banking so that you can access your account online.

To open a cash ISA with Sainsbury’s Bank you must not have paid into another Cash ISA in the same tax year – whether that is with Sainsbury’s Bank or another financial institution. Cash ISAs include both fixed rate and variable rate products.

To open a Sainsbury's Bank Fixed Rate Cash ISA, you need to invest at least £5,000 within 30 days of opening the account. This minimum deposit is required to keep the account open and get the advertised interest rate.

If you prefer a Variable Rate Cash ISA from Sainsbury's Bank, the minimum deposit required is just £1.

Early closure fees for Cash ISAs

Note that there’s an early closure charge if you close your Cash ISA account early, which means you may get back less than you paid in. 

What type of ISA should I open?

There are different types of ISAs to choose from depending on your needs. You may decide to open a Fixed Rate Cash ISA, Variable Rate Cash ISA or a Lifetime ISA. The key difference between the two cash ISAs is that a Variable Rate ISA has a variable interest rate, and a Fixed Rate ISA has a consistent interest rate for an agreed period of time. Lifetime ISAs are typically used for saving for a home or retirement.

Fixed Rate Cash ISA

With a Fixed Rate Cash ISA, the interest rate is fixed for an agreed period of time when you set up the ISA – this period is usually between one and five years. Interest rates are typically more competitive with a Fixed Rate ISA, as you’re putting your money away for longer.

However, you may have limited access to your money or not be able to make withdrawals during this time.

Variable Rate ISA

With a Variable Rate ISA, interest rates can change at any time to reflect the Bank of England’s base rate. But you usually have more freedom to access your money and can pay in or withdraw money as you please – with less stringent rules than a Fixed Rate ISA. You can open an ISA account with as little as £1 with Sainsbury’s Bank.

Lifetime ISA

A lifetime ISA can be used to either help you save for your first home or to save for later in life. You must make your first payment into a lifetime ISA before you’re 40. A lifetime ISA allows you to save up to £4,000 per year until you are 50 and a 25% bonus is given from the government if you use this ISA towards buying your first home or retirement (with a maximum property value of £450,000).   

While we do not currently offer Lifetime ISAs at Sainsbury’s Bank, here’s a list of providers that you can open a Lifetime ISA with: 

  • Banks 
  • Building societies 
  • Stockbrokers 
  • Friendly societies 
  • Other financial institutions 

Can I open an ISA account online?

Yes, it’s quick and easy to open an ISA account from the comfort of your home. Just head to the Sainsbury’s Bank website and follow the on-screen instructions. You could apply for an ISA in less than 10 minutes.

Apply for a Variable Rate Cash ISA or a Fixed Rate Cash ISA now.

What happens if I pay into two ISAs?

You are only able to pay into one of each type of ISA (Cash, Lifetime, Stocks and Shares and Innovative Finance) in the same tax year. If you do accidently pay into two of the same type of ISA, get in contact with HMRC as soon as you can to get the record straight.

It’s also important to be aware of the ISA allowance limit. This is set by the government and is the maximum amount that you’re able to save each tax year. In the UK you are only allowed to pay £20,000 into ISAs in any one tax year.

You are allowed to have multiple ISAs, as long as they are different types. For example, you may have:

  • £10,000 in a Cash ISA
  • £7,000 in a Stock and Shares ISA
  • £3,000 in a Lifetime ISA

You may decide to have a Lifetime ISA as well as a Cash ISA to make the most of the UK government incentive. If you save £4,000 a year with a Lifetime ISA, the government will reward you with a 25% bonus – this works out as £1,000 a year.

Frequently asked questions

What do I need to open an ISA?

To open an ISA, you need to contact your chosen provider. With Sainsbury’s Bank you can apply for an ISA on our website. We’ll ask you for a few details including:

  • Three years’ worth of previous addresses
  • Your ID
  • Your National Insurance or Tax Identification Number

Can you open an ISA with any bank?

Yes, you can open an ISA with any bank that offers this service. You can set up an ISA with banks, building societies, credit unions, stockbrokers, peer-to-peer lending services and other financial organisations.

How much do I need to open an ISA?

The amount that you need to open an ISA depends on the type of ISA that you’re planning on opening. To open a Fixed Rate Cash ISA with Sainsbury’s Bank you need to deposit a minimum of £5,000 within the first 30 days of the account opening. For a Variable Rate Cash ISA, you only need to deposit £1 within 30 days.