Cash ISA question

Spivo46

I have £35k in a savings account paying 4.5%. I do not want to pay any tax on this and considering a cash ISA. Can i gather interest up to the £1000 limit and then transfer to an ISA at a point later in the year to avoid taxation on the interest? I have no current ISA.

Phoenix72

You would probably be best on the savings board but do you have other taxable income that would actually make you liable to tax on anything over £1000 interest. Is the account 'easy access' with no penalties for withdrawal?

Phoenix72

And I see you asked an almost identical question in February and you were told you could. Not sure why you didn't use last years ISA allowance and the problem you know have is that you can only put £20k into an ISA this year.

Suggest you open an ISA now and get £20k in it before rates start going down.

Spivo46

Phoenix72 said:

You would probably be best on the savings board but do you have other taxable income that would actually make you liable to tax on anything over £1000 interest. Is the account 'easy access' with no penalties for withdrawal?

Pardon my stupidity, so if i stay under my personal tax allowance (no taxable income), i don't need to worry about going over the £1k of interest?

Jyana

You can make up to £6k in interest from your savings as long as your other income is below the Personal Allowance of £12,570*.  £5k is your starting rate, and then you have a further figure of £1k in Personal Savings Allowance. More info on the link below, and as others have stated above, making a thread in the savings and investments section of the site could possibly be a good idea. There's some very knowledgeable folks over there who will be able to point you in the right direction with any query you have about savings or tax on them.

https://www.gov.uk/apply-tax-free-interest-on-savings

*This is a leap year, so do double check your figures though. Sounds obvious, but many don't and can miss their income going over the PA by a few quid and not adjusting for it.