Top Cash ISAs

Mobeer

The idea is:
Year 1:
- get interest up to your tax free allowance from non-ISA account from new savings
- before year ends put new savings money into (lower interest paying) ISA

Year 2:
- get interest up to your tax free allowance from non-ISA account from new savings
- before year ends put new savings money into (lower interest paying) ISA

- get interest tax free on Year 1 savings in the ISA opened at the end of last year

If you did not use an ISA then the interest from the higher interest regular savings account could exceed your tax free allowance.

This is probably more true if you are a higher-rate tax payer and only get a £500 allowance for tax free interest.

Frogletina

Mobeer said:

The idea is:
Year 1:
- get interest up to your tax free allowance from non-ISA account from new savings
- before year ends put new savings money into (lower interest paying) ISA

Year 2:
- get interest up to your tax free allowance from non-ISA account from new savings
- before year ends put new savings money into (lower interest paying) ISA

- get interest tax free on Year 1 savings in the ISA opened at the end of last year

If you did not use an ISA then the interest from the higher interest regular savings account could exceed your tax free allowance.

This is probably more true if you are a higher-rate tax payer and only get a £500 allowance for tax free interest.

I'm not sure why year one money is left in the isa in year two unless it is in a fixed isa. 

It comes down to figures. I use the higher interest rate accounts outside of an ISA even if some gets taxed, so long as the interest less tax exceeds what I get in an ISA. I do fill up the isa at the end of the tax year, and use fixed rates from time to time.

grumiofoundation

Frogletina said:

Mobeer said:

The idea is:
Year 1:
- get interest up to your tax free allowance from non-ISA account from new savings
- before year ends put new savings money into (lower interest paying) ISA

Year 2:
- get interest up to your tax free allowance from non-ISA account from new savings
- before year ends put new savings money into (lower interest paying) ISA

- get interest tax free on Year 1 savings in the ISA opened at the end of last year

If you did not use an ISA then the interest from the higher interest regular savings account could exceed your tax free allowance.

This is probably more true if you are a higher-rate tax payer and only get a £500 allowance for tax free interest.

I'm not sure why year one money is left in the isa in year two unless it is in a fixed isa. 

It comes down to figures. I use the higher interest rate accounts outside of an ISA even if some gets taxed, so long as the interest less tax exceeds what I get in an ISA. I do fill up the isa at the end of the tax year, and use fixed rates from time to time.

Because if you take it out is is no longer in the ISA wrapper.

For some people keeping money in ISA is not just about the short term interest rate but longer term, for instance if you think you will become higher rate tax payer in a few years or if you might want to use this money in the future for Stocks and shares. 

Frogletina

:

Frogletina said:

Mobeer said:

The idea is:
Year 1:
- get interest up to your tax free allowance from non-ISA account from new savings
- before year ends put new savings money into (lower interest paying) ISA

Year 2:
- get interest up to your tax free allowance from non-ISA account from new savings
- before year ends put new savings money into (lower interest paying) ISA

- get interest tax free on Year 1 savings in the ISA opened at the end of last year

If you did not use an ISA then the interest from the higher interest regular savings account could exceed your tax free allowance.

This is probably more true if you are a higher-rate tax payer and only get a £500 allowance for tax free interest.

I'm not sure why year one money is left in the isa in year two unless it is in a fixed isa. 

It comes down to figures. I use the higher interest rate accounts outside of an ISA even if some gets taxed, so long as the interest less tax exceeds what I get in an ISA. I do fill up the isa at the end of the tax year, and use fixed rates from time to time.

grumiofoundation said:

Frogletina said:

Mobeer said:

The idea is:
Year 1:
- get interest up to your tax free allowance from non-ISA account from new savings
- before year ends put new savings money into (lower interest paying) ISA

Year 2:
- get interest up to your tax free allowance from non-ISA account from new savings
- before year ends put new savings money into (lower interest paying) ISA

- get interest tax free on Year 1 savings in the ISA opened at the end of last year

If you did not use an ISA then the interest from the higher interest regular savings account could exceed your tax free allowance.

This is probably more true if you are a higher-rate tax payer and only get a £500 allowance for tax free interest.

I'm not sure why year one money is left in the isa in year two unless it is in a fixed isa. 

It comes down to figures. I use the higher interest rate accounts outside of an ISA even if some gets taxed, so long as the interest less tax exceeds what I get in an ISA. I do fill up the isa at the end of the tax year, and use fixed rates from time to time.

Because if you take it out is is no longer in the ISA wrapper.

For some people keeping money in ISA is not just about the short term interest rate but longer term, for instance if you think you will become higher rate tax payer in a few years or if you might want to use this money in the future for Stocks and shares. 

 As I said, I put the money back into an ISA at the end of the tax year. Using flexible ISAs I can withdraw money from previous years and it doesn't lose its ISA wrapper if it goes back in each year.

paul235

Frogletina said:

 As I said, I put the money back into an ISA at the end of the tax year. Using flexible ISAs I can withdraw money from previous years and it doesn't lose its ISA wrapper if it goes back in each year.

Can this be above £20k as it would include past ISA contributions? Also from the same provider and since flexible ISA's are instant access would this not negate gains as they have lower interest rate?

masonic

paul235 said:

Frogletina said:

 As I said, I put the money back into an ISA at the end of the tax year. Using flexible ISAs I can withdraw money from previous years and it doesn't lose its ISA wrapper if it goes back in each year.

Can this be above £20k as it would include past ISA contributions? Also from the same provider and since flexible ISA's are instant access would this not negate gains as they have lower interest rate?

Yes ISA flexibility applies to past and current year contributions. When you are using a flexible ISA just to preserve the ISA status of your cash the interest rate is irrelevant since the money will only be held in the ISA for a few days each year and you won't earn interest on money while it's in another account earning interest there. Whether you can earn more net interest outside of a cash ISA will depend on a number of circumstances including your tax situation, the rates available to you now, and the trajectory of rates in the future.

derrick

I have a Coventry BS Fixed rate ISA, (2.4%), maturing at the end of May and am being offered the following rollover rates:

Easy access: 0.65%

12 months: 0.90%

24 Months: 1.00%

48 months: 1.40%

As I cannot see anything near the 1.40% and rates probably being in the doldrums for years, and not needing access to the funds, any comments on rolling over to the 48 month ISA?

gwapenut

derrick said:

I have a Coventry BS Fixed rate ISA, (2.4%), maturing at the end of May and am being offered the following rollover rates:

Easy access: 0.65%

12 months: 0.90%

24 Months: 1.00%

48 months: 1.40%

As I cannot see anything near the 1.40% and rates probably being in the doldrums for years, and not needing access to the funds, any comments on rolling over to the 48 month ISA?

What are the early access terms for the 48 months ISA? It may work out well to do that for a couple of years and jump ship / pay the penalty when rates improve.

derrick

gwapenut said:

derrick said:

I have a Coventry BS Fixed rate ISA, (2.4%), maturing at the end of May and am being offered the following rollover rates:

Easy access: 0.65%

12 months: 0.90%

24 Months: 1.00%

48 months: 1.40%

As I cannot see anything near the 1.40% and rates probably being in the doldrums for years, and not needing access to the funds, any comments on rolling over to the 48 month ISA?

What are the early access terms for the 48 months ISA? It may work out well to do that for a couple of years and jump ship / pay the penalty when rates improve.

Withdrawals will not be permitted until this account matures.
This account can only be closed subject to a charge equal to 120 calendar days interest on the balance in this account at the time of closure.

gwapenut

derrick said:

gwapenut said:

What are the early access terms for the 48 months ISA? It may work out well to do that for a couple of years and jump ship / pay the penalty when rates improve.

Withdrawals will not be permitted until this account matures.
This account can only be closed subject to a charge equal to 120 calendar days interest on the balance in this account at the time of closure.

The 120 days is very reasonable if you don't mind losing the tax free status on all the money when you take it out. Subject to allowances, it could be put into another ISA when withdrawn.
Alternatively, if you max out your allowance each year and don't want to lose any tax free status, a workaround that sometimes works is to transfer / close it when you need the money to a more flexible or lucrative account, paying the 120 days penalty on the whole amount. It all depends on whether the T&Cs allow entire transfers out with 120 days penalty.