Looking at opening a ISA

darren6645

Having watched the programme and read lots on the forum I'm going to open a fixed cash ISA asap.
As I understand it you can invest a maximum of £20k in a financial year in a cash ISA?
I'll be looking for the best rate of interest as part of the criteria but after 12mths on most deals that rate drops so I would then be looking to invest my £20k in a better deal again.
If I move the £20k from one ISA to another on maturity does that max me out again for the next financial year as I've started a new ISA with my existing £20k therfore not allowing me to invest further that year? 
My plan is to keep investing £20k each year to reach my target figure, getting the best interest deal at the time and pay no tax.
Hope that makes sense? 

Ozzig

Have a read here, it answers pretty much all things ISA you need to know ...

https://www.moneysavingexpert.com/savings/best-cash-isa/#needtoknows

Veteransaver

It's tax year ie 6th April to 5th April, not financial year.
But yes you can wrap 20k per year under an ISa, you need to follow the correct process to transfer it to another ISA, ie you can't withdraw it and then put it in a new ISA, it loses its "wrapper".
Some ISAs are flexible, meaning you can withdraw and replace, but only for the one you've opened/contributed to in that tax year.
Eg if its a flexible ISA you could put 20k into a new ISa on 6th April 2023 withdraw 15k in May, then put  the 15k back in before 5th April 2024.

eskbanker

Veteransaver said:

It's tax year ie 6th April to 5th April, not financial year.

What do you understand by the term 'financial year'?

refluxer

darren6645 said:

I'll be looking for the best rate of interest as part of the criteria but after 12mths on most deals that rate drops so I would then be looking to invest my £20k in a better deal again.
If I move the £20k from one ISA to another on maturity does that max me out again for the next financial year as I've started a new ISA with my existing £20k therfore not allowing me to invest further that year? 
My plan is to keep investing £20k each year to reach my target figure, getting the best interest deal at the time and pay no tax.

Your ISA allowance is £20k of new subscriptions every tax year and transfers of ISAs containing subscriptions from previous tax years don't count as new subscriptions and therefore don't affect your ISA allowance, which means you can do exactly what you propose - pay up to £20k into a cash ISA each tax year and, in the case of fixed rate cash ISAs, you can transfer them when they mature to get a better rate.

Note that if you're looking to open a cash ISA now then you can only pay new subscriptions into one cash ISA but from 6th April 2024, that rule is changing and you'll be able to pay into as many cash ISAs as you like.

darren6645

Veteransaver said:

It's tax year ie 6th April to 5th April, not financial year.

My mistake I wrote financial but meant tax. 🙏eskbanker said:

Veteransaver said:

It's tax year ie 6th April to 5th April, not financial year.

What do you understand by the term 'financial year'?

I meant tax year sorry 🙏 refluxer said:

darren6645 said:

I'll be looking for the best rate of interest as part of the criteria but after 12mths on most deals that rate drops so I would then be looking to invest my £20k in a better deal again.
If I move the £20k from one ISA to another on maturity does that max me out again for the next financial year as I've started a new ISA with my existing £20k therfore not allowing me to invest further that year? 
My plan is to keep investing £20k each year to reach my target figure, getting the best interest deal at the time and pay no tax.

Your ISA allowance is £20k of new subscriptions every tax year and transfers of ISAs containing subscriptions from previous tax years don't count as new subscriptions and therefore don't affect your ISA allowance, which means you can do exactly what you propose - pay up to £20k into a cash ISA each tax year and, in the case of fixed rate cash ISAs, you can transfer them when they mature to get a better rate.

Note that if you're looking to open a cash ISA now then you can only pay new subscriptions into one cash ISA but from 6th April 2024, that rule is changing and you'll be able to pay into as many cash ISAs as you like.

Sorry if I sound stupid but if I have £20k invested in a cash ISA now and the high interest rate was only for a year. In April the following year I can transfer my £20k plus interest to another cash ISA with a better interest rate and also open a second cash ISA and invest a further £20k that year so I now have £40k+ invested and repeat year on year? 

refluxer

darren6645 said:

Sorry if I sound stupid but if I have £20k invested in a cash ISA now and the high interest rate was only for a year. In April the following year I can transfer my £20k plus interest to another cash ISA with a better interest rate and also open a second cash ISA and invest a further £20k that year so I now have £40k+ invested and repeat year on year? 

If you were to open a 1 year fixed rate cash ISA now, you can simply transfer it to get a better rate when it matures in December 2024.

When you take out a fixed rate ISA, you ideally need to leave it for the duration of the fixed rate period because withdrawing the cash or transferring it to another ISA before the maturity date will incur a hefty penalty. One exception to this, though, is if rates rise dramatically and you'll be better off by transferring out early, even after paying the penalty.  

The tax year is only relevant to your £20k ISA allowance - it doesn't matter when you open an ISA account, as long as you don't exceed your allowance during any one tax year. If you pay £20k into a cash ISA now, you'll have used up your allowance for the current tax year but you'll be able to pay a further £20k into an ISA from 6th April 2024.

BTW - to avoid confusion, it's better to use the term 'save' when it comes to Cash ISAs as the term 'invest' is better suited to Stocks and Shares ISAs

Albermarle

Sorry if I sound stupid

You do not sound stupid, but if you read through the forum, you will see this same question asked and answered almost on a daily basis. So regular reading can keep you up to speed with all ISA questions.

darren6645

refluxer said:

darren6645 said:

Sorry if I sound stupid but if I have £20k invested in a cash ISA now and the high interest rate was only for a year. In April the following year I can transfer my £20k plus interest to another cash ISA with a better interest rate and also open a second cash ISA and invest a further £20k that year so I now have £40k+ invested and repeat year on year? 

BTW - to avoid confusion, it's better to use the term 'save' when it comes to Cash ISAs as the term 'invest' is better suited to Stocks and Shares ISAs

Thanks for that explanation that sounds like what I understood but best to ask. 
Apologies for the terminology but I'm knew to this so still learning. 👍🏻

Beddie

darren6645 said:

Veteransaver said:

It's tax year ie 6th April to 5th April, not financial year.

My mistake I wrote financial but meant tax. 🙏eskbanker said:

Veteransaver said:

It's tax year ie 6th April to 5th April, not financial year.

What do you understand by the term 'financial year'?

I meant tax year sorry 🙏 refluxer said:

darren6645 said:

I'll be looking for the best rate of interest as part of the criteria but after 12mths on most deals that rate drops so I would then be looking to invest my £20k in a better deal again.
If I move the £20k from one ISA to another on maturity does that max me out again for the next financial year as I've started a new ISA with my existing £20k therfore not allowing me to invest further that year? 
My plan is to keep investing £20k each year to reach my target figure, getting the best interest deal at the time and pay no tax.

Your ISA allowance is £20k of new subscriptions every tax year and transfers of ISAs containing subscriptions from previous tax years don't count as new subscriptions and therefore don't affect your ISA allowance, which means you can do exactly what you propose - pay up to £20k into a cash ISA each tax year and, in the case of fixed rate cash ISAs, you can transfer them when they mature to get a better rate.

Note that if you're looking to open a cash ISA now then you can only pay new subscriptions into one cash ISA but from 6th April 2024, that rule is changing and you'll be able to pay into as many cash ISAs as you like.

Sorry if I sound stupid but if I have £20k invested in a cash ISA now and the high interest rate was only for a year. In April the following year I can transfer my £20k plus interest to another cash ISA with a better interest rate and also open a second cash ISA and invest a further £20k that year so I now have £40k+ invested and repeat year on year? 

Yes, you can do all of those things! The £20k limit just means the amount you can pay in per tax year. Once it's in, you can transfer it etc. without any issues and still have the new allowance each year.