Notice Cash ISAs

What is a notice ISA?

Notice cash ISAs are a type of variable rate ISA that allow savers to add to and withdraw from their savings as they choose.

However, when you want to withdraw from a notice account, you won’t receive your money immediately. You’ll need to wait a specified length of time, known as the notice period, before you can receive your money.

Notice periods between 30 days and 90 days are particularly common.

As with other ISAs, the interest you earn on a notice ISA is exempt from income tax. You can deposit up to £20,000 in total across your ISA products each tax-year.

How they differ from other ISAs

Unlike no notice, or easy access, cash ISAs, notice ISAs require you to wait a minimum amount of time before you can withdraw your money. For example, if you withdraw from a 30-day notice ISA, you will only receive your money 30 days after making your withdrawal request.

But, because you can withdraw from a notice ISA without penalty, this makes them different to fixed rate ISAs which don’t typically allow any penalty-free withdrawals during the fixed term.

Another difference between notice ISAs and fixed ISAs is the interest rate. While fixed ISAs pay a guaranteed rate of interest for the specified period, interest rates on ISA notice accounts are variable which means they could go up or down at the provider’s discretion.

Benefits of notice ISAs

Notice ISAs can be a useful compromise between an easy access ISA and a fixed rate ISA if you won’t need to access your savings immediately, but you’re not comfortable locking away your money for a long period of time.

Because of the delay before you can withdraw from the account, notice ISAs may pay a higher rate of interest than no notice ISAs. However, this isn’t always the case, so it’s worth comparing notice ISAs with easy access ISAs that offer instant access to your savings.

Furthermore, the interest paid on a notice ISA (as with any type of ISA) is exempt from income tax, which can be particularly beneficial to anyone at risk of being taxed on their savings. The tax benefits of ISAs depend on your personal circumstances and may change in the future.

Understanding notice ISAs

The process of opening and depositing into a notice ISA is similar to an easy access ISA.

You can typically add to your savings whenever you choose (as long as you don’t exceed your ISA allowance), and you’ll earn interest on your savings. Notice ISAs pay variable interest rates, which means the provider could raise or lower the rate on your account.

The feature that makes notice ISAs different from other ISAs is the notice period when making withdrawals. You request a withdrawal and, instead of receiving your money straightaway, you need wait a certain number of days (such as 30 or 90).

This means you need to plan ahead, so you start the withdrawal process with enough time before you need to use your savings.

Note that some providers may require you to withdraw a minimum sum from your notice ISA.

Can I withdraw from a notice ISA before the notice period?

Providers may allow you to withdraw your money straightaway, without waiting the full notice period.

However, this will usually be subject to a penalty, such as a loss of interest. The loss of interest penalty will often be equivalent to the notice period of the account, so a 90-day notice ISA may charge a 90-day loss of interest to access your money sooner.

This penalty also applies if you want to transfer out to another ISA before the end of the notice period.

As a result, unless you need your money urgently, waiting the full notice period will normally be a better option.

Can I still pay money into a notice ISA after I’ve requested a withdrawal?

Providers typically allow you to add to your notice ISA after you’ve requested a withdrawal. This means you can pay money in while you wait to receive any withdrawn funds.

However, bear in mind that providers usually only allow one notice period to run at one time. This means you need to wait for a notice period to end before you can request another withdrawal.

Is my money safe in a notice ISA?

Your money is as safe in a notice ISA as in any other type of cash ISA. Providers are authorised and regulated by the Financial Conduct Authority (FCA) and your deposits will be protected under the Financial Services Compensation Scheme (FSCS).

The FSCS ensures you won’t lose any money if a provider goes bust, for example, but it will only protect up to £85,000 you have saved with each provider (across all your accounts).

Also, bear in mind that, if providers share a banking licence, they share the £85,000 limit. See which providers share a banking licence.

Because of this limit, it’s a good idea to split your money between different providers if you have more than £85,000 in savings.

How do I open a notice cash ISA?

It should be relatively straightforward to open a notice ISA, as long as you have all the information you need.

Depending on the provider and how you open your account, it could take a few working days to open a notice ISA.

Who can apply?

To open a notice ISA, or any ISA, you need to be at least 18 years old and a UK resident.

You are also eligible if you or your spouse (or civil partner) is serving abroad in the armed forces or as a Crown employee.

ISA providers may set their own eligibility requirements so it’s worth checking their criteria before opening an account.

Where to apply

You can open notice ISAs in different ways, depending on the provider and the account you choose.

For example, you may be able to open an account online, via mobile app, by phone, by visiting a branch or by post.

This means you can choose an account that offers a method of opening you prefer.

See our chart above to view the ways you can open different notice ISAs.

Application process

When you’ve chosen a notice ISA, you’ll need to give the provider some key information, such as your:

• name
• address
• date of birth
• email address and/or mobile phone number
• National Insurance number
• current account details
• employment and income details.

If you want to transfer in from another ISA, you’ll also need to provide details of this account.

The new provider will require you to fill out an ISA transfer form online or via post. It’s important to follow this ISA transfer process and not move the funds yourself.

Identification

Providers may be able to check and verify your identity online, but some may ask you to provide a form of identification before opening your notice ISA. For example, you may need to upload a copy of your driving licence or passport so the provider can verify your identity.

The provider will let you know if it requires any supporting documents or proof of ID.

Deposit requirements

Finally, you need to make a deposit to complete your application. Providers will specify a minimum sum you need to open your account, which could range from just £1 to £1,000 or more.

Can I transfer my notice ISA to another provider?

If you want to move your notice ISA to a different provider, you should follow the ISA transfer process. This ensures you won’t lose any of your tax-free benefits or affect your ISA allowance.

You need to apply for the account you want to transfer to and say that you want to transfer funds (whether they’re from the current tax-year or a previous tax-year). You will need to fill out an ISA transfer form and your new provider should handle it from there.

It could take up to 15 days to complete a transfer between a notice ISA and another cash ISA.

And, as with withdrawals, you’ll need to wait the full notice period before transferring to avoid any penalties.

Read more on the ISA transfer process.

Notice ISAs or notice savings accounts?

Notice ISAs and notice savings accounts work in the same way as they both require you to wait a specified number of days before accessing your money.

The key difference between notice ISAs and notice savings accounts is that you’re not liable to pay tax on the interest you earn on a notice ISA.

Notice savings accounts typically pay a higher rate of interest than notice ISAs and don’t have a maximum limit on the amount you can deposit (although providers may set their own restrictions). However, you need to pay tax if the total amount of interest you earn across your savings accounts breaches your Personal Savings Allowance (PSA).

By contrast, notice ISAs allow you to earn interest completely free of income tax, but you can only deposit up to £20,000 in ISAs each tax-year.

Alternatives to notice cash ISAs

Instead of a notice cash ISA, you could consider an easy access cash ISA. An easy access ISA allows you to dip in and out of your savings without needing to wait a notice period, which makes it a more appealing option if you want to be able to withdraw money from your savings immediately.

Some no notice ISAs may pay more competitive rates than notice ISAs, so it’s worth comparing both types of account before opening an account.

Whether you choose a notice ISA or an easy access ISA, make sure you check whether it follows flexible rules or not. A flexible ISA allows you to withdraw from and add to your account without affecting your ISA allowance.

Interest rates can change on a notice ISA so, if you want to secure a guaranteed rate, you could consider a fixed-rate ISA instead. One-year fixed ISAs are a popular option but there are also two-, three and five-year fixed ISAs available.

Bear in mind that you can’t withdraw money from a fixed-rate ISA or transfer to a new ISA provider, unless you’re willing to sacrifice some interest.

If you’re not at risk of earning more interest than your Personal Savings Allowance, which is set at £1,000 per year for basic-rate taxpayers, you could consider a standard notice savings account or another type of savings account instead of an ISA.

Savings accounts often pay a higher rate than their equivalent ISA, so they could be a more appealing option for savers wanting to maximise the returns on their money.