How is the ISA interest calculated?

JoJoOwen

Q1 - If I invest £20k into an ISA this week, will the interest be the same as if I had invested on the 8th of April 2022?  Or is the interest calculated over the year so I will only get 1 weeks interest?
Q2 - Do the ISA fixed interest rates usually fall in the 2nd year?
Q3 - Can I invest another £20k after April 6th this year?
Appreciate any advice x

eskbanker

JoJoOwen said:

Q1 - If I invest £20k into an ISA this week, will the interest be the same as if I had invested on the 8th of April 2022?  Or is the interest calculated over the year so I will only get 1 weeks interest?

Interest is pro rata, i.e. if the money is in the account for a week, it earns a week's worth of interest not a year's worth!

JoJoOwen said:

Q2 - Do the ISA fixed interest rates usually fall in the 2nd year?

Not if they're fixed for more than a year!  If you have a one year fix, then it'll typically change into a lower-paying easy access account on maturity.

JoJoOwen said:

Q3 - Can I invest another £20k after April 6th this year?

Yes, the allowance is annual, and resets each tax year.  Edit: as pointed out below, this may not actually be answering the question you were asking - you have a new £20K ISA allowance, but that doesn't necessarily signify that you can add £20K to the same ISA as such, if that's what you meant, as that'll depend on the terms of the account you open (fixed term accounts usually only have a short funding window).

Albermarle

I think you are getting mixed up between the terms and conditions of the savings account ( easy access, one year fix, three year fix etc ) and the ISA tax shelter. ( maximum £20K per tax year etc )