ISA Accounts

Is an ISA treated more or less like a Roth IRA where the money is not tax deductible but you're not taxed when you withdrawal and you have access at any time (with some possible penalties)?  

Thanks.

You really should go into a bank and discuss options/products/services.  I've noticed that even though things may seem relatively similar there are differences. 

I don't know, sorry. I can tell you that you DO have access to the account whenever you want, but there is also a maximum you can contribute per year.  Tim doesn't get penalized when he pulls money out of his, but like JessicaKate said, that policy might vary by bank and your status with the bank.

But what Tim and I would like to know is if I'd be eligible to open an ISA account right away. He has one, and he'd like me to have one as well if I'm eligible while on a spousal visa. If Im' not, we'll just wait until I have my citizenship, but an extra 3 years of savings would be nice!

I have a Mini Cash ISA - I can deposit up to £3,000 per year into it (year running from April 6th-April 5th) and I can withdraw what I want, when I want (some ISAs don't allow you to do this though). However, once I have withdrawn an amount, I can't repay it back in again if I have already reached my £3,000 limit for the year (i.e. if I pay in £2,500 and then withdraw £2,000, I can only pay back in another £500 before April comes around). ISAs are usually good because they are tax-free and high interest (well, they were high interest before the recession!) - for my account, interest is only added at the beginning of each tax year though.

I have an ISA with ING. I don't know whether it's tax deductible as I don't have any control over my taxes here but it is tax free savings and I don't get penalised for taking money out. My limit is £3600.

It bear noting that the interest income on a Cash ISA is not tax free from a US perspective.  Also Stock ISAs are highly punitive in the US and may be worth avoiding.

That's what I've heard too, that ISA's can be taxed in the US, which is why I've avoided opening one.  A shame too, because I wish I could have one!

I've had a mini-cash ISA for years and just report the interest on my US tax filing. I've never put in the full amount in any given year, so I've found the interest has never been so much that I had to actually pay any tax on it to the US. Stock ISAs are different, but I think cash ISAs are worth it, especially if your savings aren't huge; the interest rate is better than any other account (even now mine had been pulling 3.5% until next month, when it goes down to 3%).

Yes the interest is all taxable by the United States, the account and any investments wrapped within it are of course reportable to the United States on the annual FBAR.

[Similar additional reporting may be required in future under FATCA if this passes - the latest action in the House was included in the Tax Extenders Bill on December 7th].

Just one note.  ISAs can only be applied for if you are Ordinarily Resident for UK tax purposes.  Some of the folks using this board are Not Resident and/or Not Ordinarily Resident although most are Resident and Ordinarily Resident.