Tax free savings

Band7

justwantedtosay said:

 

And another thing... It seems that if I open a fixed rate ISA with £1,000 it means I've blown the rest of my allowance for the year [assuming I don't want to throw my money away on shares - anybody else had a nightmare week there!?] Doesn't that seem crazy to you? Perhaps they should make the rule that you can only pay into one cash ISA provider in any tax year rather than one cash ISA. Who has exactly £20k lying around looking for a home?

Nearly all fixed rate accounts, whether ISA or non ISA, have a deposit limitations, from between one deposit only to several deposits in a limited window after account opening. These terms are detailed in the key information document and in the T&Cs. It is down to you to read those. Nothing crazy about understanding the T&Cs before you commit your money.

There is one cash ISA provider I am aware of who might have a very long deposit window, even several years, and that is Shawbrook Bank. You will, however, have to check the terms of their products as they may vary from product to product, like for any other provider.

If you want to make multiple cash ISA deposits throughout the tax year, your options are an instant access ISA, or a Regular Saver ISA. Another option is that you save up your money outside an ISA, e.g. in non-ISA Regular Saver accounts, and once you know that you have reached your max amount, move it all into an ISA. That way, you might be one of those who do have £20k lying around looking for a home.

On a slightly different matter: have you verified that you will actually benefit from a cash ISA?

justwantedtosay

Band7 said:

Nearly all fixed rate accounts, whether ISA or non ISA, have a deposit limitations, from between one deposit only to several deposits in a limited window after account opening. These terms are detailed in the key information document and in the T&Cs. It is down to you to read those. Nothing crazy about understanding the T&Cs before you commit your money.

Yes, I realise all fixed rate accounts have limitations, my point is that it seems unnecessary to prevent you opening more than one ISA, not that you should be able to add to the first one. You can open as many regular fixed rate accounts as you want, why not ISAs, up to £20,000 and with the same provider. It can't be that difficult.

As for needing an ISA, my question was about the chance of the tax allowances being ended and more/all interest being taxed, but as little as £4,200 in a 5-year fix at 4.4% would take you over the £1,000 personal savings allowance if the interest is all taxable at the end of the term.

eskbanker

justwantedtosay said:

And another thing... It seems that if I open a fixed rate ISA with £1,000 it means I've blown the rest of my allowance for the year [assuming I don't want to throw my money away on shares - anybody else had a nightmare week there!?] Doesn't that seem crazy to you? Perhaps they should make the rule that you can only pay into one cash ISA provider in any tax year rather than one cash ISA. Who has exactly £20k lying around looking for a home?

That is already a legitimate interpretation of the rules, so some providers do allow you to fund multiple cash ISAs concurrently:

https://www.moneysavingexpert.com/savings/best-cash-isa/#accordion-content-620297425-6

justwantedtosay

eskbanker said:

justwantedtosay said:

And another thing... It seems that if I open a fixed rate ISA with £1,000 it means I've blown the rest of my allowance for the year [assuming I don't want to throw my money away on shares - anybody else had a nightmare week there!?] Doesn't that seem crazy to you? Perhaps they should make the rule that you can only pay into one cash ISA provider in any tax year rather than one cash ISA. Who has exactly £20k lying around looking for a home?

That is already a legitimate interpretation of the rules, so some providers do allow you to fund multiple cash ISAs concurrently:

https://www.moneysavingexpert.com/savings/best-cash-isa/#accordion-content-620297425-6

Thanks. I asked my usual provider and they said no, so I assumed that was universal. I wonder why others don't allow this, it would seem very sensible. I'll have to see what rates those providers offer.

wmb194

justwantedtosay said:

Thanks all. I only recently discovered that interest on a fixed rate account is all taxed at the end of the term and not annually...

Careful, it all depends. Essentially, if you have or have had the opportunity to access the interest then it should be taxed annually. 

The problem is that some providers that presently offer no option e.g., Nationwide's (NW) current crop of online bonds have told forum members that they (including NW) will report the interest to HMRC annually so what will HMRC expect/what can you get away with (it won't know the terms of your bond)?

I always try to only open bonds that pay interest away monthly so I can avoid this aggravation.

Better not to derail this thread with the ins and outs but recently there have been a few e.g., https://forums.moneysavingexpert.com/discussion/6431490/tax-on-savings-account-interest/p1

Eco_Miser

justwantedtosay said:

... or play safe with an ISA.

ISAs aren't safe from governmental action either. When some people have over a million pounds protected from taxes, cutting them could be spun as action against the tax-dodging rich.

subjecttocontract

People have held over a £million in ISAS for a few years now.........it isn't new news even if it's in the national papers today.

Eco_Miser

Quite, but that doesn't stop some future Chancellor using it as an excuse to cut ISAs, just like low average savings could be used to cut the Starting Rate for Savings, as discussed upthread.

justwantedtosay

Eco_Miser said:

justwantedtosay said:

... or play safe with an ISA.

ISAs aren't safe from governmental action either. When some people have over a million pounds protected from taxes, cutting them could be spun as action against the tax-dodging rich.

I'd imagine cash ISAs are safer, nobody has a huge sum saved in them, and I can't believe any change in the rules would affect existing accounts especially fixed term accounts.

justwantedtosay

If anyone's still thinking about cash ISAs, I've just been told by a building society that if you transfer, say, £10k of previous years' money out of a cash ISA you can then replace it with new money in addition to your £20k limit and thereby save £30k, in this case, of new money in one tax year. Can that be right?