Partial savings locked in until July - What should I be doing to stay tax free?

vibez

Hi all,

I have £17k locked into a fixed savings account until July 2024
and
£8k in an easy access savings account


Interest earned this year will be £1300 taking me over my PSA (£1k)

What should I be looking to do next tax year? I presume when my fixed matures in July I can't stick it in an ISA. Should I put my £8k into an ISA and the £17k into an easy access savings account until the following year, after which I can then move £10k of that into an ISA? 

ColdIron

vibez said:

I presume when my fixed matures in July I can't stick it in an ISA.

Why not? From April 6th you have a £20,000 allowance available to you

vibez

ColdIron said:

vibez said:

I presume when my fixed matures in July I can't stick it in an ISA.

Why not? From April 6th you have a £20,000 allowance available to you

Can you transfer into an ISA after April? 

ColdIron

Of course. What makes you think you can't?

vibez

ColdIron said:

Of course. What makes you think you can't?

I thought I read I had to open it by 6th of April

gravel_2

vibez said:

ColdIron said:

Of course. What makes you think you can't?

I thought I read I had to open it by 6th of April

That's when the new tax year starts. You can contribute up to 20k into ISAs every tax year, which is why you see ISA fever kick in leading up to April. It's a mix of people who have not used this year's ISA allowance looking for somewhere to put their money and those who have waiting for the next tax year to start.

You can open an ISA whenever you like as long as you only add 20k per year in total across all ISAs you have.

vibez

gravel_2 said:

vibez said:

ColdIron said:

Of course. What makes you think you can't?

I thought I read I had to open it by 6th of April

That's when the new tax year starts. You can contribute up to 20k into ISAs every tax year, which is why you see ISA fever kick in leading up to April. It's a mix of people who have not used this year's ISA allowance looking for somewhere to put their money and those who have waiting for the next tax year to start.

You can open an ISA whenever you like as long as you only add 20k per year in total across all ISAs you have.

Ah I get you now. I presume the interest is pro-rata - as in, if I pay in halfway through the year, I only get half a year's worth of interest?

gravel_2

vibez said:

gravel_2 said:

vibez said:

ColdIron said:

Of course. What makes you think you can't?

I thought I read I had to open it by 6th of April

That's when the new tax year starts. You can contribute up to 20k into ISAs every tax year, which is why you see ISA fever kick in leading up to April. It's a mix of people who have not used this year's ISA allowance looking for somewhere to put their money and those who have waiting for the next tax year to start.

You can open an ISA whenever you like as long as you only add 20k per year in total across all ISAs you have.

Ah I get you now. I presume the interest is pro-rata - as in, if I pay in halfway through the year, I only get half a year's worth of interest?

I suggest you think about it in a different way. You earn the stated amount of interest on every penny you have in the account. If it's in the account for a year you will get a year's worth of interest. If you only leave it there for 1 day, you will accrue 1 day's worth of interest. 

You are still tied up on the 6 April date - its irrelevant for your question on interest. If you open an ISA in July 2024, it will earn the stated annual rate of interest. If you close it in July 2025, you will get one year of interest. If you close it in July 2030 you will get several years of interest during the life of that account.

vibez

gravel_2 said:

vibez said:

gravel_2 said:

vibez said:

ColdIron said:

Of course. What makes you think you can't?

I thought I read I had to open it by 6th of April

That's when the new tax year starts. You can contribute up to 20k into ISAs every tax year, which is why you see ISA fever kick in leading up to April. It's a mix of people who have not used this year's ISA allowance looking for somewhere to put their money and those who have waiting for the next tax year to start.

You can open an ISA whenever you like as long as you only add 20k per year in total across all ISAs you have.

Ah I get you now. I presume the interest is pro-rata - as in, if I pay in halfway through the year, I only get half a year's worth of interest?

I suggest you think about it in a different way. You earn the stated amount of interest on every penny you have in the account. If it's in the account for a year you will get a year's worth of interest. If you only leave it there for 1 day, you will accrue 1 day's worth of interest. 

You are still tied up on the 6 April date - its irrelevant for your question on interest. If you open an ISA in July 2024, it will earn the stated annual rate of interest. If you close it in July 2025, you will get one year of interest. If you close it in July 2030 you will get several years of interest during the life of that account.

Again thanks for that. Just had it in my head it was a April to April thing but I see now that it rolls over and it is just a cap of £20k that can be paid in during that window.

One last question, I can take out a cash isa with 2 providers this new yea, correct? I.e £10k spread across 2 cash isas?

elkiedee

When you refer to "interest earned this year" do you mean interest this financial year 2023/24 or this calendar year?

Have you been paid interest on the account that's fixed until July in this financial year? If not, for example if it's a 1 year fix paying out at maturity and not an ISA, then the interest will count in the next financial year, I think - though some of the higher rate accounts would use quite a lot of your personal savings allowance on £17K.

vibez

elkiedee said:

When you refer to "interest earned this year" do you mean interest this financial year 2023/24 or this calendar year.

Have you been paid interest on the account that's fixed until July in this financial year? If not, for example if it's a 1 year fix paying out at maturity and not an ISA, then the interest will count in the next financial year, I think - though some of the higher rate accounts would use quite a lot of your personal savings allowance on £17K.

Now you mention it, i'm not sure.

My fixed pays me interest in July and I guess next year. My easy access has been paying out each month. So good chance i'm below my PSA for this year anyway.