Chip cash ISA account - pay the monthly interest in to the instant access account instead?

dreaMer001

I've a balance of £20000 in the Chip cash ISA account. 

Is it possible to choose another Chip account, e.g. Chip instant access account, as the account to pay the monthly interest in to?

At the moment interest is paid on around the 4th of each month in to the Cash ISA account. As it is, next month (november 2024) when the interest is paid, it will undoubtedly exceed the ISA allowance. 

From my research up to now, it doesn't matter if you exceed, it just means anything over £20,000 won't be tax free. 

If there is no way to configure (in the settings of the App) would I need to manually transfer around £100 from the Cash ISA account to the instant access account before the 4th each month, so that the £20,000 allowance is not exceeded?

Archerychick

The £20k allowance is for new money paid into an ISA. Interest that you earn from a ISA is tax free, and so having this in your ISA is expected. Also it’s a good idea to keep that inside the tax wrapper so it continues to be tax free savings. 

masonic

Suggest you do some more research.

If anything over £20k wasn't tax free, you wouldn't find threads with people fretting about splitting their ISA as it gets close to £85k. Also, interest doesn't count towards the annual allowance.

dreaMer001

masonic said:

Suggest you do some more research.

If anything over £20k wasn't tax free, you wouldn't find threads with people fretting about splitting their ISA as it gets close to £85k. Also, interest doesn't count towards the annual allowance.

I did enough! Couldn't see any threads on here that answered my question specifically and conclusively (I don't accept that my question is answered by seeing threads with people fretting about splitting their ISA as it get close to the £85k!!). Maybe the search feature is on the blink. Do you mind sharing a thread that does?

Catplan

dreaMer001 said:

masonic said:

Suggest you do some more research.

If anything over £20k wasn't tax free, you wouldn't find threads with people fretting about splitting their ISA as it gets close to £85k. Also, interest doesn't count towards the annual allowance.

I did enough! Couldn't see any threads on here that answered my question specifically and conclusively (I don't accept that my question is answered by seeing threads with people fretting about splitting their ISA as it get close to the £85k!!). Maybe the search feature is Kaput! Do you mind sharing a thread that does?

In your opening post, you said:

“At the moment interest is paid on around the 4th of each month in to the Cash ISA account. As it is, next month (november 2024) when the interest is paid, it will undoubtedly exceed the ISA allowance. 

From my research up to now, it doesn't matter if you exceed, it just means anything over £20,000 won't be tax free. “

I think this is why it was suggested you do more research. 

The interest being added will not cause you to exceed the ISA allowance and also everything inside the ISA wrapper is paid interest tax free. I don’t know where you done your research that makes you think interest added is counted towards ISA allowance or that anything over 20k is taxable, because this isn’t the case and your understanding isn’t correct here. Nothing is taxed in an ISA, interested isn’t part of your yearly subscription, and undoubtedly won’t cause you to exceed the ISA allowance.

Not sure where you picked up on it doesn’t matter if you exceed, it does, it will be flagged by HMRC what action they take is up to them but it will likely need correcting. If you simply have a single ISA it is unlikely you’d be allowed to deposit more than 20k, all that I hold for example would return anything over 20k if I tried to deposit once I’d reached the limit. If you have more than 1 ISA in any tax year it is up to you to keep track of deposits, this is where mistakes are most likely to occur.

masonic

dreaMer001 said:

masonic said:

Suggest you do some more research.

If anything over £20k wasn't tax free, you wouldn't find threads with people fretting about splitting their ISA as it gets close to £85k. Also, interest doesn't count towards the annual allowance.

I did enough! Couldn't see any threads on here that answered my question specifically and conclusively (I don't accept that my question is answered by seeing threads with people fretting about splitting their ISA as it get close to the £85k!!). Maybe the search feature is on the blink. Do you mind sharing a thread that does?

Here are a couple of threads from the ISAs & Tax Free Savings board here discussing ISAs that are reaching or exceeding the £85k FSCS compensation limit:

https://forums.moneysavingexpert.com/discussion/6558827/trading-212-cash-isa-fscs-protection-across-3-banks

https://forums.moneysavingexpert.com/discussion/6557588/partial-isa-transfer-options

https://forums.moneysavingexpert.com/discussion/6554660/trading-212-cash-isa-fscs-question

https://forums.moneysavingexpert.com/discussion/6535809/partial-isa-transfers

https://forums.moneysavingexpert.com/discussion/6523196/marcus-isa-to-zopa-isa
https://forums.moneysavingexpert.com/discussion/6501759/virgin-money-is-it-safe
https://forums.moneysavingexpert.com/discussion/6507760/cash-isa-over-the-fscs-protection-limit

https://forums.moneysavingexpert.com/discussion/6477531/splitting-my-cash-isa

More importantly, here is the MSE guide to cash ISAs on the main site, and some discussion about saving more than the £20k annual allowance:

https://www.moneysavingexpert.com/savings/best-cash-isa/#needtoknows

AmityNeon

dreaMer001 said:

masonic said:

Suggest you do some more research.

If anything over £20k wasn't tax free, you wouldn't find threads with people fretting about splitting their ISA as it gets close to £85k. Also, interest doesn't count towards the annual allowance.

I did enough! Couldn't see any threads on here that answered my question specifically and conclusively (I don't accept that my question is answered by seeing threads with people fretting about splitting their ISA as it get close to the £85k!!). Maybe the search feature is on the blink. Do you mind sharing a thread that does?

Do you mind sharing the thread(s) that lead to your misunderstanding of ISA rules?

I suggest you start with the basics: https://www.moneysavingexpert.com/savings/best-cash-isa/