Can I add next year to a fixed ISA?

PigOfHappiness

Hi, I’ve come in to some money and looking at the first time at ISAs. I’ll be able to add £20k each tax year for the next few years. Which do you think is a better option, put this years £20k in a 1 year fixed, then open a new account each tax year or, open a flexible ISA and add £20k to the same account each year? Any thoughts please?

Mark_d

Depends on you age, your priorities and other finances.

Suppose you're in your 30's and have no big expenses on the horizon, then each year you might want to put 4k in a S&S LISA and 16k in a S&S ISA.  You might also want 50k in premium bonds as your capital is safe and you get tax free growth.

400ixl

Most fixed ISA's only allow you to fund them for X days from opening.

With the flexible ISA, if the rates can be changed then you are gambling as to whether it will go up, down or stay the same by next year.

Having multiple ISA's over multiple years is not really much of an issue, other than for cash ones you often then need to move them if the rates drop after the fix.

Albermarle

As said after an initial funding window, you can not normally add more money to a fixed ISA, or withdraw from it without a penalty.
in any case at the end of the one year fix, the account will close . Before that you will be offered options of what you want to with the money. 

Open a new one year ( or longer ) fix with the same provider. 

Let the money transfer to an easy access isa with them.
Transfer the money to a new isa with a different provider

Have the money transferred to your bank account ( you would lose the ISA status)

badmemory

Personally I tend to keep my ISAs separate.  Many you have to close to gain access.  So rather than having to close a larger one to access some money, I would rather just access a smaller one leaving more untaxable.

refluxer

The important thing to consider is whether you'll need access to the money because, while you can access money within a fixed rate ISA if you really need to, the penalties are usually pretty severe so it's good to avoid that scenario if possible.

If you definitely won't need access to it and interest rates drop as predicted over the next few years then opening fixed rate cash ISAs may prove a better option than easy access, but it'll obviously be a gamble whatever you go for. 

A couple of ISA providers who allow you to add further deposits to their fixed rate cash ISAs throughout the duration of the fixed rate period are Barclays and Kent Reliance. Barclays' rates aren't great at the moment, but Kent Reliance currently have one of the better 1 year fixed rates currently available so if you opened one of those with £20k now, you'd been able add a further £20k on 6th April 2025 and get almost 7 months for that money at today's rate which might prove to be a good option if rates fall between now and then. If they were to rise, then you can simply open a new one elsewhere.

I don't have any experience with Kent Reliance but I have done this with Barclays, when their rates were more competitive. I opened an 18 month Barclays ISA speculatively with a small transfer at the end of 2023 to lock in a decent rate and was able to add my 2024-25 ISA allowance to it earlier this year at a higher rate than was otherwise available, because fixed rates had dropped since the account was opened.

None of this is a personal recommendation and obviously only you can decide what's right for your own needs - I just thought I'd mention it as an option as I've had experience of doing something similar and it would appear to suit one of the scenarios you described.

Rich2808

Lloyds also allow you to add deposits for the entire duration of the fixed rate term.

With these providers you can just add the minimum opening deposit - as a hedge - and top up/transfer in later if rates plummet! And if they don't - you haven't lost out much.

Any other providers allow this in addition to Kent Reliance and Barclays?

Albermarle

Rich2808 said:

Lloyds also allow you to add deposits for the entire duration of the fixed rate term.

With these providers you can just add the minimum opening deposit - as a hedge - and top up/transfer in later if rates plummet! And if they don't - you haven't lost out much.

Any other providers allow this in addition to Kent Reliance and Barclays?

Shawbrook allow ongoing contributions to fixed rate/term accounts.
Only for the fixed rate ISA's though, not for non ISA accounts, so there is a natural limit of how much more you can add. So max £20K per tax year, unless you have used some/all of the allowance somewhere else.
Also transfers in of other ISA's after the initial period are only allowed at their discretion.