Interest in Saving Account
Following this post I found on Money Saving Expert detailed below - does anyone know whether the interest accumulated in the normal saving accounts would have to be below the PSA before moving the sum back into an ISA? For example, let's say you earned £1,500 in interest which will be over your Personal saving allowance, will it still be taxable if you move it into an ISA before the end of the financial year?
Apologies if this is a silly question, any advice will be greatly appreciated.
Post I found on MSE:
Play the system to max interest and keep ISA benefits
Taking this to its extreme, there's a nifty trick you could use to keep your money tax-free forever in an ISA while getting a higher interest rate for most of the year.
Let's say you have £50,000 in flexible ISAs, but other savings accounts pay higher interest that you want to take advantage of, and you don't want to lose your ability to keep £50,000 tax-free year after year as you can in a cash ISA (see Is the cash ISA worth it?). Plus remember the personal savings allowance means you can earn up to £1,000 in interest in non-ISA savings accounts each financial year tax-free.
- At the start of the new tax year – so from 6 April – withdraw the ISA cash.
- Put it in (several) high interest accounts (see our Top savings guide for the best deals).
- Before 5 April the following year just put it back in the ISA to keep your tax protection.
- Repeat the process again and again.
This means your money would be earning more interest for most of the year, whilst still keeping the long-term benefits of an ISA.
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