A Nicer Cash ISA

Good Money -issue 2-ISA650

An ISA is a savings account where you don’t pay tax on any income you earn. Always a smart choice for savers, new rules introduced at the start of this month mean it is now possible to save £15,000* - for cash ISAs, that’s an increase of £9,060 - tax free. There’s simply never been a better time to look at ISAs.

The golden rules for ISAs remain the same:

  • You must be a UK resident and over 16
  • You can open an ISA (cash and/or stocks and shares) on the first day of the new tax year (6 April) and can add savings to it until the end of that tax year (5 April in the following year)
  • You can only pay into one cash ISA and one stocks and shares ISA during each tax year
  • You don’t pay any tax on returns generated. With a normal savings account you pay HM Revenue and Customers (HMRC) 20p of every £1 income you earn - with an ISA you get to keep all of the profit.

However, there have been some changes as a result of the new ISA rules, and here we list the most common questions our Customer Services department has received about our new cash ISA.

Q: What is different about this new ISA?

A: It is more generous than the ones that have come before. Previously it was only possible to save £5,940 in a 2014/2015 cash ISA, but now you can save up to £15,000 tax free.

Q: I saved £5,940 in my 2014/2015 ISA. Now that this new ISA has been introduced, can I save up the new limit of £15,000?

A: Yes you can, but it must be the same cash ISA.

Q: Do I have to save £15,000 in my 2014/2015 ISA?

A: No. £15,000 is the upper limit that you can save, meaning you can pay in as much or as little into your cash ISA as suits your personal circumstances, however, it must not be more than £15,000 and the minimum opening balance of the Al Rayan Bank Notice Cash ISA is £250.  

If your cash ISA allows transfers, you can transfer balances greater than £15,000.

Q: I didn’t open an ISA at the start of the tax year - can I open one now?

A: Yes you can.

Q: Can I top up ISAs from previous years?

A: No, the new £15,000 limit applies to ISAs from the current tax year only, you can’t top up an ISA taken out in an earlier tax year.

Q: I would like to take out a cash ISA with Al Rayan Bank as the profit rate is on the best buy table. However, I am not a Muslim. Is this a problem?

A: No, not at all. Al Rayan Bank is an inclusive bank and welcomes customers of all faiths.

Al Rayan Bank Notice Cash ISA

Al Rayan Bank's Notice Cash ISA is the UK's first Sharia compliant Cash ISA, and offers savers an ethical, tax-free way to save. Since its launch, it has consistently featured on the ‘Best Buy’ tables.

Al Rayan Bank's Notice Cash ISA is operated under the Islamic finance principle of Wakala which is an agency agreement for investment, where we work as the agent to achieve an expected (or target) profit rate. In the 10 years since it was founded, we have never failed to pay the expected profit rate, and in some cases it has paid more to its customers than expected.

The minimum deposit for the Al Rayan Bank Notice Cash ISA is £250 and requires savers to give 120 days’ notice in order to make a withdrawal. Savers can make regular deposits**, and profit is calculated and accrued to the account monthly.

The Al Rayan Bank Notice Cash ISA can be managed online, via the post or through our branches.

Al Rayan Bank's cash ISA, like all of our products, is fully approved by an independent Sharia Supervisory Committee (SSC) and an internal Sharia Compliance Department.

More on the Notice Cash ISA

For more information about investing in a Sharia compliant Stocks and Shares ISA, we can put you in touch with an Independent Financial Advisor (IFA).  Fees will be charged for this service, arranged and agreed at the outset between yourself and the IFA. Please call our Customer Services team on 0808 271 4295 for more information or to book an appointment. 

* Correct for a basic rate tax payer.  This is our understanding of the current tax laws which are subject to change.

** Up to £15,000 per annum limit

You might also be interested in...