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

gravel_2

vibez said:

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?

Yes. For the next tax year you can open multiple of the same type of ISA. The only thing to ensure is that your total contribution into all of your ISAs in the tax year does not exceed £20k.

vibez

gravel_2 said:

vibez said:

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?

Yes. For the next tax year you can open multiple of the same type of ISA. The only thing to ensure is that your total contribution into all of your ISAs in the tax year does not exceed £20k.

Thanks, by next tax year, you mean 6th April 2024?

gravel_2

vibez said:

gravel_2 said:

vibez said:

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?

Yes. For the next tax year you can open multiple of the same type of ISA. The only thing to ensure is that your total contribution into all of your ISAs in the tax year does not exceed £20k.

Thanks, by next tax year, you mean 6th April 2024?

The period beginning 6 April 2024 and ending 5 April 2025.

VNX

Open an ISA

Qyburn

vibez said:

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

You could move the £8k into an ISA rIght now. Doing so means (a) no more taxable interest from it and (b) you'll have your full £20k allowance available next financial year. Deal with the fix when it matures in July, at which time it will be near to £18k depending on the interest rate.