Paying in more than £20k into an ISA - Bad idea?

vibez

So i've paid £20k into an ISA already this year. The rate on the ISA is roughly the same as current savings accounts.

Would it be a bad idea to pay another £10k into that ISA? Any downsides vs paying it into a savings account?

masonic

An ISA provider will not allow you to pay in more than £20k within a single tax year. Current regular saver accounts pay up to 7%, so perhaps you mean easy access savings accounts.

vibez

masonic said:

An ISA provider will not allow you to pay in more than £20k within a single tax year. Current regular saver accounts pay up to 7%, so perhaps you mean easy access savings accounts.

I thought you could pay in any amount but only the first £20k is tax free? i'm with chip so not sure exactly which rules apply

Looking here around 5% is rate on saver accounts. Who is offering 7%?
Best savings accounts: 5.2% easy access or 5.18% fixed rates (moneysavingexpert.com)

vibez

Sorry I didn't mean regular saver, I meant fix term or easy access savings accounts

Sam_666

You need to do some reading on how ISA works first. Then come back with less random questions.

ColdIron

vibez said:

Would it be a bad idea to pay another £10k into that ISA?

Yes. It's not allowed

Alderbank

Where is the £10k coming from?

If that £10k is already inside an ISA 'wrapper' at another bank or a different account then yes you (probably) can, but you must make sure the transfer is done properly. You request your new ISA provider to liaise with the holder of the £10k.

The reason for doing this would be because the new provider is paying a higher rate of interest.

MSE's recommended ISA provider Trading212 is paying a higher rate than my existing ISAs were paying so I opened an account with them and paid in a total of £60k. All legal and allowed.

masonic

Alderbank said:

MSE's recommended ISA provider Trading212 is paying a higher rate than my existing ISAs were paying so I opened an account with them and paid in a total of £60k. All legal and allowed.

You would not have paid in all of this money. Your old ISA provider will have transferred in the majority. An ISA provider is only permitted to receive more than £20k into an ISA paid in by a customer within the same tax year if they are using an APS (i.e. they inherited an ISA from a spouse or their old provider failed and they received FSCS compensation) or if the customer already held a larger balance and had flexibly withdrawn the excess sum earlier in the same tax year.