ISA and regular savings account question

Lia73

Hi. I have 55k savings into a 5% savings  easy access account and I also transferred my isa savings into a fixed yearly interest account in March. I have 25000 in there and it also pays 5%. My question is do I need to transfer 20000 from my savings account to the ISA now to get the full tax free interest in that account or would I still get the same interest if I moved that money over in February next year? I'm asking really if I'll get paid the same amount of interest for what will be in my ISA account (45000), regardless of wether I put that in today or just before the new tax year. Does the amount of time the money has been in the ISA have any effect? If not then I can keep 20k in my savings account and earn interest there too (I get it monthly) and just move it next year. Hope I've made sense here and appreciate any advice.

jimjames

You only get interest for the time the money is in an account so you won't be paid the same interest in Feb as if the money had been in the account since May. (I think that was your question)

But you have until April 2025 to use your ISA allowance for this year so you don't need to pay money into it yet if you have a better paying account in the meantime

slinger2

Lia73 said:

Hi. I have 55k savings into a 5% savings  easy access account and I also transferred my isa savings into a fixed yearly interest account in March. I have 25000 in there and it also pays 5%. My question is do I need to transfer 20000 from my savings account to the ISA now to get the full tax free interest in that account or would I still get the same interest if I moved that money over in February next year? I'm asking really if I'll get paid the same amount of interest for what will be in my ISA account (45000), regardless of wether I put that in today or just before the new tax year. Does the amount of time the money has been in the ISA have any effect? If not then I can keep 20k in my savings account and earn interest there too (I get it monthly) and just move it next year. Hope I've made sense here and appreciate any advice.

The 5% is the amount of interest you'd get if you left a fixed amount of money in the account for a year. However the interest will be calculated daily (roughly 0.013% per day) depending on what's in the account that day. So if you add money now into the ISA you'll get more interest from the ISA account but less from the non-ISA account.

If you're paying tax on your non-ISA savings it probably makes sense to move the money into the ISA now (other things being equal), since interest on that account will be tax free.

Catplan

Many fixed accounts have a funding window so you may find you can’t add to existing ISA. You are free to open another ISA for this year allowance of course. Unless it’s one of the fixed rate ISAs that do allow funding throughout the duration of the fix although these the exceptions rather than the rule.

Lia73

jimjames said:

You only get interest for the time the money is in an account so you won't be paid the same interest in Feb as if the money had been in the account since May. (I think that was your question)

But you have until April 2025 to use your ISA allowance for this year so you don't need to pay money into it yet if you have a better paying account in the meantime

Thank you. That is what I wanted to know and what I thought.

Lia73

Catplan said:

Many fixed accounts have a funding window so you may find you can’t add to existing ISA. You are free to open another ISA for this year allowance of course. Unless it’s one of the fixed rate ISAs that do allow funding throughout the duration of the fix although these the exceptions rather than the rule.

Did not know that so will check that now. Thanks.

Lia73

slinger2 said:

Lia73 said:

Hi. I have 55k savings into a 5% savings  easy access account and I also transferred my isa savings into a fixed yearly interest account in March. I have 25000 in there and it also pays 5%. My question is do I need to transfer 20000 from my savings account to the ISA now to get the full tax free interest in that account or would I still get the same interest if I moved that money over in February next year? I'm asking really if I'll get paid the same amount of interest for what will be in my ISA account (45000), regardless of wether I put that in today or just before the new tax year. Does the amount of time the money has been in the ISA have any effect? If not then I can keep 20k in my savings account and earn interest there too (I get it monthly) and just move it next year. Hope I've made sense here and appreciate any advice.

The 5% is the amount of interest you'd get if you left a fixed amount of money in the account for a year. However the interest will be calculated daily (roughly 0.013% per day) depending on what's in the account that day. So if you add money now into the ISA you'll get more interest from the ISA account but less from the non-ISA account.

If you're paying tax on your non-ISA savings it probably makes sense to move the money into the ISA now (other things being equal), since interest on that account will be tax free.

Thank you. Should have done this last month but will do it now.