Can Foreign Students Apply for an ISA While Studying in the UK?

Why should I worry about banking?

As a student, money is often in short supply. Any way that you can make it stretch that bit further is a good thing and the motto for many is "every little helps". One easy way to help your finances is through the way that you choose to do banking.

The simple process of choosing where to place your savings can save you a surprising amount of money, both in the short and long term. What's more, unlike some money saving tactics, you don't have to sacrifice anything other than a little time to research the best deals.

What options do I have?

In terms of basic everyday current accounts, there isn't a huge amount of difference between the different banks. One thing to look out for is that many of them offer special free gifts for students. Whilst some of these are merely gimmicks, some are really useful and can save you loads of money.

Savings accounts are the ones that you really should spend a bit of time researching. There are of course your standard savings accounts, but, more often than not, the best option is an ISA.

What exactly is an ISA?

ISA stands for Individual Savings Account and is basically a tax free savings account. In standard savings accounts you will have to pay anything between 20% and 45% of the interest earned on tax, but for ISAs, this tax is waived- any interest earned isn't taxed at all.

This means that even though the interest rate may not be as high as some other savings accounts, because the interest isn't taxed, it works out better. For example, if an ISA is offering 3% interest, a regular savings account would have to offer 3.75% to better it.

You can place a maximum of £5,760 in each ISA, but you can open a new ISA every single year and have as many as you want. This means that over the years you can put a significant amount of money in ISAs and you don't have to pay a single penny of tax on the interest you earn.

Am I eligible for an ISA?

One thing that is important to bear in mind is that not all foreign students are eligible for ISAs. As the accounts are so inter-connected with tax, ISA eligibility depends on whether you are a resident in the UK for tax purposes. If your student visa allows you to work in the UK then chances are you will count as a UK resident for the purpose of tax. If this is the case then you should have no problem opening an ISA.

So, if you're looking for somewhere to put your savings, why not consider an ISA. Though it may not seem like much, you'll be surprised by how much money you can save in a relatively short amount of time. And the more money you save on boring things like banking, the more you have to spend on the more exciting parts of being a student.

Share with friends