ISA or pay tax on interest?

Hi. I'm fortunate Enough to have savings from a lump sum when I retired. I have managed to get a good fixed rate ISA for this year at 4.3% and have put the £20000 in. I have an old flexible ISA the rate is 2.67%. My query is it better to leave money in this old ISA with a rubbish rate, but interest won't be taxed or move it to a high fixed rate of 4.6%, but will mean I will go over my £1000 allowance and will have to pay tax some of the interest? It's a mine field! Thanks.

Comments

  • JGB1955
    JGB1955 Posts: 3,470 Forumite
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    Why not move your flexible ISA into a higher paying ISA?  The interest will still be tax-free.
    #2 Saving for Christmas 2024 - £1 a day challenge. £131 of £366
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 13,395 Forumite
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    Would you have any savings starter rate band available?

    This can be used where your earnings/pension income is low enough that you don't pay basic rate tax on at least £5,000 of it.
  • helenann
    helenann Posts: 13 Forumite
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    No, I have a work pension and state pension, so only have the £1000 interest allowance. Not sure how to work out whether I'm better of getting less interest or pay tax on the better interest.?
  • helenann
    helenann Posts: 13 Forumite
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    I've opened a new ISA for this year already, it didn't allow transferring in other ISA's- so I'm not sure I can do anything about the old ISA I have🤷‍♀️
  • JGB1955
    JGB1955 Posts: 3,470 Forumite
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    edited 11 May 2023 at 6:14PM
    helenann said:
    I've opened a new ISA for this year already, it didn't allow transferring in other ISA's- so I'm not sure I can do anything about the old ISA I have🤷‍♀️
    You can move it to any other account that accepts transfers in....you should be looking for a provider that offers more than 4%

    Do a search at Best 1 Year ISA Rates (moneyfactscompare.co.uk)
    #2 Saving for Christmas 2024 - £1 a day challenge. £131 of £366
  • Expotter
    Expotter Posts: 347 Forumite
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    edited 11 May 2023 at 6:34PM
    You are allowed to open more than one ISA you know, as long as you only pay new money into only one (of each type) per tax year up to a total of £20k. So it's perfectly okay to transfer an old ISA (previous year money) into a new one, fixed, easy access, flexible or not, it doesn't matter. You can even transfer it to a Stocks&Shares ISA if you wanted to, just remember it has to be using the transfer process, you open another one and request them to transfer the old one.
  • helenann
    helenann Posts: 13 Forumite
    First Anniversary Combo Breaker First Post
    So helpful, thanks a million. I didn't know you could open more than one ISA each year. I'll look into this for sure. 👍
  • Albermarle
    Albermarle Posts: 21,993 Forumite
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    helenann said:
    So helpful, thanks a million. I didn't know you could open more than one ISA each year. I'll look into this for sure. 👍
    You might find it useful to have a good scroll through this forum to get more up to speed on all the ISA rules. There are lots of posts about transfers for example.
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