Problems with getting the best savings accounts - Any suggestions?

ToastLady

worriednoob said:

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?

1. I doubt Chip would let you put more than £20000 into your ISA, as in you exceeding the full £20K allowance (not putting money in and out over the year, which could clearly show a different figure). Some have fallen foul of the rules by opening and funding more than one ISA in the past. This no longer applies as you can open as many as you wish. No idea what the taxman will do, but you are unlikely to lose your tax allowance. As I said originally, it is extremely unlikely that Chip would allow you to put more in than you are allowed.

2. Hard to say, depends on your individual circumstances and tax situation. 

3. Again, hard to say. I'm getting very boring now, but as long as you don't go over your 20K ISA yearly allowance (excluding interest added). You could easily add a monthly sum to your ISA if you have spare cash at the end of every month. I would really advise you to keep a note of it all, many use a spreadsheet. 

nottsphil

EthicsGradient said:

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.

You've basically contradicted yourself. You acknowledged that paying back in that last £2000  withdrawal matches the £8000 high watermark again. You've even (correctly) stated 'plus another £12k' can be added. Therefore, £8K must have been used up!

nottsphil

Albermarle said:

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 ? 

No it's not. The total sum of your deposits is not relevant because it's the highest balance (of new money for that tax year) that matters. So, near the end of the tax year, add up the highest balances  (of new money for that year) in each of your ISAs and subtract from £20,000 to show how much you can top up by.

EthicsGradient

nottsphil said:

EthicsGradient said:

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.

You've basically contradicted yourself. You acknowledged that paying back in that last £2000  withdrawal matches the £8000 high watermark again. You've even (correctly) stated 'plus another £12k' can be added. Therefore, £8K must have been used up!

"8k" wouldn't then tell you on its own what you can do in the rest of the year. If the last 2 actions had been deposit 11k and then withdraw 8k, the high water mark would be 14k, but you would be able to do exactly the same in the rest of the year (eg deposit another 14k) as the example with a high water mark of 8k. The 14k, or 8k, isn't "used up". The only meaning of that figure is that it mustn't go over 20k. But it doesn't get "used up".

gravel_2

EthicsGradient said:

nottsphil said:

EthicsGradient said:

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.

You've basically contradicted yourself. You acknowledged that paying back in that last £2000  withdrawal matches the £8000 high watermark again. You've even (correctly) stated 'plus another £12k' can be added. Therefore, £8K must have been used up!

"8k" wouldn't then tell you on its own what you can do in the rest of the year. If the last 2 actions had been deposit 11k and then withdraw 8k, the high water mark would be 14k, but you would be able to do exactly the same in the rest of the year (eg deposit another 14k) as the example with a high water mark of 8k. The 14k, or 8k, isn't "used up". The only meaning of that figure is that it mustn't go over 20k. But it doesn't get "used up".

It is used up in the sense that it has to be repaid back into that ISA. You are not free to throw it elsewhere. 

nottsphil

gravel_2 said:

EthicsGradient said:

nottsphil said:

EthicsGradient said:

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.

You've basically contradicted yourself. You acknowledged that paying back in that last £2000  withdrawal matches the £8000 high watermark again. You've even (correctly) stated 'plus another £12k' can be added. Therefore, £8K must have been used up!

"8k" wouldn't then tell you on its own what you can do in the rest of the year. If the last 2 actions had been deposit 11k and then withdraw 8k, the high water mark would be 14k, but you would be able to do exactly the same in the rest of the year (eg deposit another 14k) as the example with a high water mark of 8k. The 14k, or 8k, isn't "used up". The only meaning of that figure is that it mustn't go over 20k. But it doesn't get "used up".

It is used up in the sense that it has to be repaid back into that ISA. You are not free to throw it elsewhere. 

Or rather it can only be repaid to that ISA. S/he just doesn't get that if £8000 has been earning tax-free interest at any point during the tax year, then there is only £12,000 of the allowance left.

Albermarle

. 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?

Normally HMRC will find out at some point. If it is the first time and not for a large amount, you will probably just get a warning not to do it again.

worriednoob

Sorry for the late replies guys.  Just had a lot going on.  I've now opened the Chip Cash ISA account and moved my money in.  But one thing I've realised is that there is no mention of how often the 5.10% is paid.  Is it monthly or annually?

flaneurs_lobster

worriednoob said:

Sorry for the late replies guys.  Just had a lot going on.  I've now opened the Chip Cash ISA account and moved my money in.  But one thing I've realised is that there is no mention of how often the 5.10% is paid.  Is it monthly or annually?

Interest will be calculated daily and paid monthly on the fourth business day of each month. 

From the Summary

worriednoob

flaneurs_lobster said:

worriednoob said:

Sorry for the late replies guys.  Just had a lot going on.  I've now opened the Chip Cash ISA account and moved my money in.  But one thing I've realised is that there is no mention of how often the 5.10% is paid.  Is it monthly or annually?

Interest will be calculated daily and paid monthly on the fourth business day of each month. 

From the Summary

Sorry, I must be blind or half asleep, haha.  Thanks very much