Problems with getting the best savings accounts - Any suggestions?

worriednoob

@Middle_of_the_Road & @Bigwheels1111 - Thanks, but I'm still unclear - If throughout the year I took deposited/withdrew money multiple times, say a £1000 out and a £1000 in every single week or month, would this cause any issues if this is a cash ISA? - Sorry, I just don't want to end up with an account with any limits at all or being stuck where I can't take out the money or get hit with a penalty.

@MX5huggy - Thanks, but for me personally, it doesn't make financial sense to go with 4.91% if I can get 5.1% with chip as an existing customer, but I appreciate the recommendation.

@flaneurs_lobster - Thanks.  I had a look at this, but two issues:-

1. It says for new customers only and I'm an existing customer of Chip.
2. Normally clicking through Topcashback would take me to a website where I would continue to purchase the item which would then be tracked, but how does Topcashback track this if it's only taking you to the Chip website which then asks you to download the Chip app?

gravel_2

worriednoob said:

@Middle_of_the_Road & @Bigwheels1111 - Thanks, but I'm still unclear - If throughout the year I took deposited/withdrew money multiple times, say a £1000 out and a £1000 in every single week or month, would this cause any issues if this is a cash ISA? - Sorry, I just don't want to end up with an account with any limits at all or being stuck where I can't take out the money or get hit with a penalty.

It is a flexible ISA. During any tax year you can replace any amount that you withdraw from the ISA without affecting your ISA allowance. It doesn't matter how many transactions as long as you don't pay in more than 20k of new money into ISA products in any individual tax year.

Naturally if the money is withdrawn from the account, it's not earning interest until it's back in the account.

Albermarle

Is one issue with a flexible easy access cash ISA, is that you have to keep a record of the movements in and out, so you do not inadvertently go over the £20K, or forget to replace it all in time ? I am not sure I have never had one.

Worth noting for the record that not all easy access cash ISA's are flexible . In this case I would tend to avoid them as once you withdraw any money you have lost the ISA status.

ToastLady

The Chip easy access account is flexible. As long as the OP sticks to the £20K limit for this tax year, and does not open another ISA, they will be fine.
I've opened the Zopa flexible easy access and just put in £5000. Going to stick at £5000 and open another fixed ISA with £15K later this year, whether it be with Zopa or not depends on rates at the time. 

worriednoob

Thanks.
@gravel_2 and @ToastLady - Forgive me, but your answers are confusing and conflicting to me.  You says that's its a flexible as long as we stilck to the £20K limit, but what if I build up £20K in an ISA, withdraw the amount multiple times over the year, always putting back the £20K into the same ISA account? Also what happens if I don't stick to the £20K limit for the year? Do I get penalised? Or does the taxman come after me?

slinger2

You can put in £20k, withdraw it and put it back in (in the same tax year). And you can repeat that as many times as you want.

Someone talked about a "high water mark" which I think is useful. You need to know the maximum net amount of your deposits over the tax year. Suppose you add £5k, withdraw £2k, deposit £5k and withdraw £2k. You've now got £6k in the account but you've used up £8k of your allowance.

EthicsGradient

slinger2 said:

You can put in £20k, withdraw it and put it back in (in the same tax year). And you can repeat that as many times as you want.

Someone talked about a "high water mark" which I think is useful. You need to know the maximum net amount of your deposits over the tax year. Suppose you add £5k, withdraw £2k, deposit £5k and withdraw £2k. You've now got £6k in the account but you've used up £8k of your allowance.

Surely in this case the £8k isn't "used" - £8k is the high water mark, but that last £2k withdrawal can now be reversed without raising the high water mark. You'd be able to add another £14k if you wanted - the "reversed" £2k plus another £12k.

ToastLady

As far as I am aware, and this is assuming you are only going to be putting money into one flexible ISA, in this case Chip, in this financial year. You can put in money and withdraw it as much as you like in this tax year, so long as you do not exceed the £20K total in the ISA account (other than interest). Come 5th April next year, your total balance in your ISA account should not be over 20K (apart from interest which would take it over £20000, but that is allowed). It would be wise to keep a note of what you put in and take out, just for easiness sake and your own peace of mind.

It will be easier for me keeping tabs on £5000. I don't intend to use the money, but it's there if needed. Plus the interest gained won't be anywhere near as much as with a larger sum, so no real need for me to keep notes. However, I would anyway if I needed to use and replace the money, more as an aide memoire.

worriednoob

Thanks @slinger2, @EthicsGradient and @ToastLady

I certainly don't plan to put more than £20k in an ISA, but:-

1. What are the consequences of going over the max £20k threshold? For example, does the taxman get notified, do I get charged a penalty/interest or do my tax allowances get cancelled out?

2. To avoid complications, would I be better off putting say £15k in the Chip ISA and anything over that amount in other high interest paying accounts?

3. If I have spare money every month, am I okay to put that into the Chip ISA or would I be better off putting it in another account to avoid issues?

Middle_of_the_Road

Put 15K in the ISA and any further savings in another account then. Avoids confusion regarding keeping to the ISA deposit limit.