I've got into a muddle!

ItsForMe2024

I had £1550.00 in a zopa easy access ISA, but I thought I'd take it out and put it into the Chip Easy Access ISA. I also added £17800 (around that sum) but then realised after I'd done it the interest rate had dropped. So I took it all out and transferred it back into the Zopa ISA. Both are flexible.

Have I made a mistake? And will I pay tax on any of this? I now have £18981.00 in Zopa and £0 in chip.

I have covid so I'm not functioning well.
I was trying to get a higher % rate but it backfired.

My interest rate with Zopa is 5.08%AER as I had the top up bonus when I opened the account.
Also when you withdraw money from this isa can you add more as long as you don't go over £20k.

I'm in a muddle!!!

masonic

When you flexibly withdraw money from an ISA you must now put it back into the same ISA. This means each ISA has a high water mark for how much of your allowance it has used. Since you have added £18.9k to two different ISAs, this breaches the £20k allowance and most of the money you paid into Zopa will be invalid due to £18450 of your allowance being used at Chip before you added the money to Zopa. Only the first £1550 added to Zopa was valid.

If you replace the money flexibly withdrawn from Chip, then transfer the Chip ISA to Zopa, that might resolve the situation, at least in regard to the current money being invalid. Though it still isn't clear how HMRC will be monitoring compliance with the new ISA rules.

ItsForMe2024

Am I allowed £20k tax free savings in  ordinary savings accounts?

I only have £19898 altogether in money. Could I keep this in a non ISA with higher interest and transfer money over when I hit £20k? 

Dazed_and_C0nfused

ItsForMe2024 said:

Am I allowed £20k tax free savings in  ordinary savings accounts?

I only have £19898 altogether in money. Could I keep this in a non ISA with higher interest and transfer money over when I hit £20k? 

You can have however much you want in a non ISA account (subject to individual account rules).

But any interest from a non ISA account will be taxable income.

However your Personal Allowance or the 0% tax bands available for savings interest (up to £6,000) may mean no tax is owed on non ISA interest.

masonic

ItsForMe2024 said:

Am I allowed £20k tax free savings in  ordinary savings accounts?

I only have £19898 altogether in money. Could I keep this in a non ISA with higher interest and transfer money over when I hit £20k? 

Savings aren't taxed. It is interest that is taxed. The amount of interest you can earn before you start to pay tax will depend on your circumstances, as outlined above. There is no limit to the amount of savings you can use to generate that interest. You can earn interest without paying any tax up to this point and if you had any available ISA allowance, you could move the savings into an ISA to avoid earning any more taxable interest. At the moment, your ISA allowance is fully used, but you are allowed to hold up to £1,550 in your Zopa ISA and up to £18,450 in your Chip ISA based on what you have described in the opening post.

ItsForMe2024

Thank you
 masonic said:

ItsForMe2024 said:

Am I allowed £20k tax free savings in  ordinary savings accounts?

I only have £19898 altogether in money. Could I keep this in a non ISA with higher interest and transfer money over when I hit £20k? 

Savings aren't taxed. It is interest that is taxed. The amount of interest you can earn before you start to pay tax will depend on your circumstances, as outlined above. There is no limit to the amount of savings you can use to generate that interest. You can earn interest without paying any tax up to this point and if you had any available ISA allowance, you could move the savings into an ISA to avoid earning any more taxable interest. At the moment, your ISA allowance is fully used, but you are allowed to hold up to £1,550 in your Zopa ISA and up to £18,450 in your Chip ISA based on what you have described in the opening post.

Thank you 

400ixl

When you say took it out of the ISA, what do you mean, withdrew it to a banking account, or did an ISA transfer?

If the former, what dates were the transactions?

ItsForMe2024

I just typed out a long reply and lost it...
So the basics are....
I transferred £1550 out of Zopa  and then added around £18k to the money and put that all into the Chip account yesterday. 

The interest rate dropped in between this, as it was showing at 5.2% so I drew it all out and put it all into Zopa again. Again this was yesterday.

Today I withdrew all the money from the Zopa account except the £1550 and put it allback into my. Chase account where it was originally all but the £1550k  which has 5.10% interest 
I earn £16k to £17k per year.
Both these isa's were opened in this tax year.
Zopa 24/4/24
Chip 02/8/24

ItsForMe2024

I withdrew the money I didn't transfer from one ISA to another 

ItsForMe2024

Can I put anymore money into the Zopa ISA?

ItsForMe2024

Sorry for all the replies but it won't let me edit any of the comments 
I meant to put £1550 is in Zopa