Savings, ISAs, tax bands and CONFUSION!

hieveryone

Hello, 

I need some help/divine intervention! 

My husband and I have about £50k in savings. 

£40k is in two separate ISA's - one is ending 24th November, the other in April 2025.

I've just realised both of these ISA's are in my husbands' name - a higher rate tax payer. I am a basic rate tax payer. 


Should I; 

- Open an ISA in my name and withdraw the 20k and put it into mine at the end of the month.
- Open another ISA in my name in April 2025 and put the other 20k into it? 

Thanks for any guidance. 

eskbanker

Were the two ISAs funded in separate tax years?  If so, it's unclear why there's any reason to do anything, or are you just wanting to balance things more evenly between you?

El_Torro

It doesn't matter too much that your ISAs are in your husband's name. There is no tax payable on ISAs so it's not a problem that he is a higher rate tax payer. There would be no advantage in transferring it to an ISA in your name.

I suggest you open an ISA in your name now and put the £10k you have that isn't in ISAs into it. 

hieveryone

eskbanker said:

Were the two ISAs funded in separate tax years?  If so, it's unclear why there's any reason to do anything, or are you just wanting to balance things more evenly between you?

Yes, I'm pretty sure they were, we had to wait until the April to put the other 20k in. 

I was panicking thinking there will be tax to pay on the interest as he is a higher rate tax payer? 

hieveryone

El_Torro said:

It doesn't matter too much that your ISAs are in your husband's name. There is no tax payable on ISAs so it's not a problem that he is a higher rate tax payer. There would be no advantage in transferring it to an ISA in your name.

I suggest you open an ISA in your name now and put the £10k you have that isn't in ISAs into it. 

Thank you - 

When this ISA 'ends' at the end of this month, does it continue to run as an ISA? (This is the first time we've really had money!!) 

How do I get to the point where I can put all the savings money into one ISA?

Dazed_and_C0nfused

hieveryone said:

eskbanker said:

Were the two ISAs funded in separate tax years?  If so, it's unclear why there's any reason to do anything, or are you just wanting to balance things more evenly between you?

Yes, I'm pretty sure they were, we had to wait until the April to put the other 20k in. 

I was panicking thinking there will be tax to pay on the interest as he is a higher rate tax payer? 

The main (only?) selling point of a Cash ISA is that the interest is exempt from income tax.

El_Torro

When you say the ISA ends I assume you mean that it is on a fixed rate at the moment. Once that ends your ISA provider will change the ISA to an easy access ISA with a variable rate. You can then either leave it where it is or transfer it to another ISA provider. 

If you want all the money in one ISA then you can do that by not taking out fixed rate ISAs, just consolidate your different ISA accounts. Remember thought that you can't have joint ISAs, your husband's ISAs and yours are separate. If you want them all under one person's name then you will need to take the money out of the ISA and open a new ISA, which eats into your annual ISA allowance. 

eskbanker

El_Torro said:

Remember thought that you can't have joint ISAs, your husband's ISAs and yours are separate. If you want them all under one person's name then you will need to take the money out of the ISA and open a new ISA, which eats into your annual ISA allowance. 

They're currently both in one name and can stay that way?

El_Torro

eskbanker said:

El_Torro said:

Remember thought that you can't have joint ISAs, your husband's ISAs and yours are separate. If you want them all under one person's name then you will need to take the money out of the ISA and open a new ISA, which eats into your annual ISA allowance. 

They're currently both in one name and can stay that way?

The husband might have used his ISA allowance already this year, if so the remaining £10k will need to be in the OP's name. Unless they want to wait until the new tax year.

hieveryone

El_Torro said:

When you say the ISA ends I assume you mean that it is on a fixed rate at the moment. Once that ends your ISA provider will change the ISA to an easy access ISA with a variable rate. You can then either leave it where it is or transfer it to another ISA provider. 

If you want all the money in one ISA then you can do that by not taking out fixed rate ISAs, just consolidate your different ISA accounts. Remember thought that you can't have joint ISAs, your husband's ISAs and yours are separate. If you want them all under one person's name then you will need to take the money out of the ISA and open a new ISA, which eats into your annual ISA allowance. 

Yes, the fixed rate (Nationwide 4.9%) ends at the end of this month. The other one is a 4.1% which doesn't end until April 25. 

Feeling very unknowledgeable!! 

kimwp

You should go read up on ISAs, the main website has a guide. The main things are
1. You don't pay tax on money or stocks and shares in ISA's. They are protected from tax.
2. Each person gets a £20k ISA allowance each year. If you put 20k in an ISA, then you can't put any more money into any ISAs that tax year. Even if you withdraw some money from an ISA, you can't then put that money in a different ISA if you have already used your 20k allowance for that year. (There are some exceptions to this- some cash ISAs allow money to be replaced within the same tax year)
So if you take money out of an ISA, you are wasting the allowance that you previously had.