Question about total tax free allowance of Lloyds cash ISA over many years

OtiNanai

Hi, hope you are all doing well.

I opened a Lloyds Fixed Rate 1 year Cash ISA on March 30th and deposited 20.000 gbp.
Since the financial year ended on April 5th, can I deposit another 20.000 in the same account in a month and get tax free interest for the entire 40.000?

Thanks

soulsaver

I believe you can top up the lloyds 1 year fix . Top up your ISA | UK ISAs | Lloyds Bank
In your case, you will get tax free interest on on the total sum until March 29th 2025.

How many years? One on a 1 year fix -  more if you transfer it to another ISA at maturity.

jimjames

Depends if Lloyds allow multiple deposits but if they don't there is nothing to stop you putting the money in a different ISA elsewhere which might be advantageous as you'll get a better rate

Reed_Richards

I think it was established in another thread that (unusually) with these Lloyds fixed rate cash ISAs you can continue to top-up throughout the term.  In which case the short answer is yes.  

OtiNanai

jimjames said:

Depends if Lloyds allow multiple deposits but if they don't there is nothing to stop you putting the money in a different ISA elsewhere which might be advantageous as you'll get a better rate

yeah but the 2nd ISA account in a different bank would not pay tax-free interest, right?

eskbanker

OtiNanai said:

jimjames said:

Depends if Lloyds allow multiple deposits but if they don't there is nothing to stop you putting the money in a different ISA elsewhere which might be advantageous as you'll get a better rate

yeah but the 2nd ISA account in a different bank would not pay tax-free interest, right?

Wrong, it would....

Albermarle

OtiNanai said:

jimjames said:

Depends if Lloyds allow multiple deposits but if they don't there is nothing to stop you putting the money in a different ISA elsewhere which might be advantageous as you'll get a better rate

yeah but the 2nd ISA account in a different bank would not pay tax-free interest, right?

The whole idea of cash ISA's is that any interest gained is tax free........

You would probably benefit from spending some time reading through this forum.

OtiNanai

so is it possible to have le'ts say 3 different cash isa accounts with 3 different banks and earn tax free interest with each account (each account has 20.000 gbp) or the tax free allowance is 20.000 per year in total? (so only the money in 1 cash isa account will be tax free and the interest earned on the other 2 accounts will be taxed?)

molerat

OtiNanai said:

so is it possible to have le'ts say 3 different cash isa accounts with 3 different banks and earn tax free interest with each account (each account has 20.000 gbp) or the tax free allowance is 20.000 per year in total? (so only the money in 1 cash isa account will be tax free and the interest earned on the other 2 accounts will be taxed?)

You can only pay £20K per tax year into an ISA.  New rules this year mean that can be split across different ISAs.  Your £20K was paid in last tax year meaning this year's £20K allowance is available to you.  Cash, including interest, from previous years ISAs can be transferred into new ISAs without affecting your current year allowance.   Paying in excess of £20K into ISAs in a year could mean that money being removed from the ISA and returned to you or put into a low interest account.

figgyc

OtiNanai said:

so is it possible to have le'ts say 3 different cash isa accounts with 3 different banks and earn tax free interest with each account (each account has 20.000 gbp) or the tax free allowance is 20.000 per year in total? (so only the money in 1 cash isa account will be tax free and the interest earned on the other 2 accounts will be taxed?)

You can (as of this tax year) have as many cash ISAs as you like between multiple banks. However there is a £20000 yearly limit, between all ISAs of all types in all banks, not per bank. So for example £10k in one, £5k in another, £5k in another.

Each bank's system does not talk to each other but they all talk to HMRC so if you try to put more than £20k in a year then come the new tax year they will find out, and you will end up in a bunch of admin faff (not sure exactly but at the very least you'll be paying tax on the interest, it might even get voided) so don't do that. If you want to save more than £20k then put the rest of the money in non-ISA accounts (which generally have higher rates anyway although the tax will eat into this) or you may want to consider Premium Bonds (another tax-free way to save, you can only hold £50k at a time per person, and they're not as simple as normal savings since they pay prizes instead of interest - there's plenty of info on MSE about them)

slinger2

There's no tax free allowance, there's a limit of £20k that you can pay in each tax year. You can open 3 ISAs with your £20k and they all give you tax free interest. Or you can open one this tax year with £20k, another next year and a third the year after that, and they will all give you tax free interest.