Young and Confused about savings!

HevsMcC

Please help! I have only had to think about money and accounts over the past year or two as I am only young however I feel a little confused …
I know ISAs are tax-free but why are we taxed on our savings? If I pay tax on my wages before it gets to me and then transfer it to a normal savings account – why am I then taxed again to keep it there and how is this calculated?? If I was to keep my wages building up in my current account for which I get no interest – would I be taxed on it? Really don’t understand how it works!
Secondly, I currently have had the same Cash E-ISA for 2 years (in my name only), every month my boyfriend pays say £300 into my current account and then I transfer that plus my money into my ISA and we just use the one account to keep OUR savings in one place together as we both then dip back in and out when we need it and even together would not reach the £15000+ limit. Is this ‘wrong’/against the law, because his money is in my name?!
Lastly, this year we want to open the Government Help to Buy ISA but cannot do so until after April due to holidays etc. Obviously in this instance we would both have an ISA and both separately pay in the £200pm each but before getting to this point, could I transfer the full amount of my existing ISA say for example £2000 back to my current account then transfer his £1000 back to him for him to put in his new H2B ISA and then me do the same with my £1000? Or do you have to use the ISA transfer service? If so how would this work because the fact that we share one currently?
Hope this all makes sense and that somebody is able to help clear it up for me. Thank you

BE95

HevsMcC wrote: »

Please help! I have only had to think about money and accounts over the past year or two as I am only young however I feel a little confused …
I know ISAs are tax-free but why are we taxed on our savings? If I pay tax on my wages before it gets to me and then transfer it to a normal savings account – why am I then taxed again to keep it there and how is this calculated?? If I was to keep my wages building up in my current account for which I get no interest – would I be taxed on it? Really don’t understand how it works!
Secondly, I currently have had the same Cash E-ISA for 2 years (in my name only), every month my boyfriend pays say £300 into my current account and then I transfer that plus my money into my ISA and we just use the one account to keep OUR savings in one place together as we both then dip back in and out when we need it and even together would not reach the £15000+ limit. Is this ‘wrong’/against the law, because his money is in my name?!
Lastly, this year we want to open the Government Help to Buy ISA but cannot do so until after April due to holidays etc. Obviously in this instance we would both have an ISA and both separately pay in the £200pm each but before getting to this point, could I transfer the full amount of my existing ISA say for example £2000 back to my current account then transfer his £1000 back to him for him to put in his new H2B ISA and then me do the same with my £1000? Or do you have to use the ISA transfer service? If so how would this work because the fact that we share one currently?
Hope this all makes sense and that somebody is able to help clear it up for me. Thank you

If you get no interest on your current account then you will pay no extra tax because you are making no extra money.
Maybe you should look at other current accounts which offer 5% as these will pay a lot more interest than the cash isa.
I would take out all the money of the isa now and save in the current account, and close the isa, then come April if that is the soonest you can open one, then open 2 separate, there is nobody stopping you transferring the money to your boyfriend the same way nobody is stopping him transfer to you.
I hope this has helped and if you have any questions ...

Archi_Bald

Agree with BE95, as long as the new ISAs (s)he is talking about are HTB ISAs. For a list of best non-ISA interest accounts, see https://forums.moneysavingexpert.com/discussion/5374614

HevsMcC wrote: »

I know ISAs are tax-free but why are we taxed on our savings? If I pay tax on my wages before it gets to me and then transfer it to a normal savings account – why am I then taxed again to keep it there and how is this calculated??

On a general point:

• you are not getting taxed again as you do not pay tax on any of your savings. You might pay tax on the interest your savings earn - that's a very different thing than paying tax on savings
  
  
• paying tax on interest isn't necessarily the worst case as there are many accounts that pay a lot more interest after tax than your tax-free ISA. For example:
  • £1000 earns £15 interest a year in a 1.5% ISA
  • £1,000 earns £40 after BR tax in a 5% TSB Plus account
  
  
• that last point becomes even more true when you get an additional savings interest allowance from next April

jimjames

Bit confused why you can't open a HTB ISA due to holiday, surely you're not away till April? You can easily transfer any existing ISA for the initial payment and withdraw rest of cash to get better rate.

You also seem a little confused about ISAs. You cannot share an ISA as it's an individual account so not quite sure what your current setup is.

CLAPTON

your BF can open a HTB ISA now and start paying his 200 per m into it.

as you already have an ISA then it may not be feasible to open one before april (or at least more complicated:) who do you have the ISA with?

BE95

jimjames wrote: »

Bit confused why you can't open a HTB ISA due to holiday, surely you're not away till April? You can easily transfer any existing ISA for the initial payment and withdraw rest of cash to get better rate.

You also seem a little confused about ISAs. You cannot share an ISA as it's an individual account so not quite sure what your current setup is.

I am guessing due to holiday payments as to why they cant open one yet?

CLAPTON wrote: »

your BF can open a HTB ISA now and start paying his 200 per m into it.

as you already have an ISA then it may not be feasible to open one before april (or at least more complicated:) who do you have the ISA with?

I like this idea!

Archi_Bald wrote: »

Agree with BE95, as long as the new ISAs (s)he is talking about are HTB ISAs.

I was