Savings, ISAs, tax bands and CONFUSION!

kimwp

What do you mean by "the ISA ends"? Do you mean the interest rate drops? If so, you might want to look for a better rate, but if so, you should transfer the ISA, not withdraw the cash, unless you are happy with the consequence of doing that in relation to your ISA allowances.

hieveryone

kimwp said:

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.

Thank you - I can't seem to get my head around the allowance and the tax year thing at all - I think I'll make an appointment at the bank, it might sink in a bit better. 

eskbanker

hieveryone said:
I can't seem to get my head around the allowance and the tax year thing at all - I think I'll make an appointment at the bank, it might sink in a bit better. 

They're really not as complex as many seem to think - fundamentally they're just sole savings accounts into which you can only pay up to £20K in any tax year, with all interest or growth free of tax.

The only other significant aspect that differentiates them from standard savings accounts is that in order to preserve the tax-free status, they must be transferred from one ISA to another using the receiving provider's ISA transfer process.

There are one or two other minutiae regarding flexibility provisions and guaranteed access, but those are the essentials....

kimwp

hieveryone said:

kimwp said:

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.

Thank you - I can't seem to get my head around the allowance and the tax year thing at all - I think I'll make an appointment at the bank, it might sink in a bit better. 

It probably feels more complicated than it is. You (an individual adult) are allowed to put up to a limit of 20k into ISAs each tax year to protect the 20k from tax. The important action is putting the money in, this is what counts towards your annual 20k limit.

Then the rules are different wth different types of ISAs- some types you can open more than one of, where you can only have one of others. Some (LISAs, have monetary limits and limits of what age you can be to open or contribute). 

Barkin

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. 

Be careful with this!

While most may work this way, there are others - Skipton is one that springs to mind - that will, unless you tell them otherwise, roll it over to another product of the same type.

As always... check the account terms & maturity documents. 

LHW99

Barkin said:

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. 

Be careful with this!

While most may work this way, there are others - Skipton is one that springs to mind - that will, unless you tell them otherwise, roll it over to another product of the same type.

As always... check the account terms & maturity documents. 

But either way, the money doesn't lose its tax-free status unless you (or your husband) actually draw the money out.

Barkin

LHW99 said:

Barkin said:

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. 

Be careful with this!

While most may work this way, there are others - Skipton is one that springs to mind - that will, unless you tell them otherwise, roll it over to another product of the same type.

As always... check the account terms & maturity documents. 

But either way, the money doesn't lose its tax-free status unless you (or your husband) actually draw the money out.

True, but that wasn't the point that I was addressing.

Which is that... failing to pay attention could result in money being tied up for a period that you don't want, at a rate that you don't like, and with no way of accessing those funds without forfeiting n-days interest.

kimwp

Barkin said:

LHW99 said:

Barkin said:

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. 

Be careful with this!

While most may work this way, there are others - Skipton is one that springs to mind - that will, unless you tell them otherwise, roll it over to another product of the same type.

As always... check the account terms & maturity documents. 

But either way, the money doesn't lose its tax-free status unless you (or your husband) actually draw the money out.

True, but that wasn't the point that I was addressing.

Which is that... failing to pay attention could result in money being tied up for a period that you don't want, at a rate that you don't like, and with no way of accessing those funds without forfeiting n-days interest.

Does Skipton put it into another fixed period account? Bit cheeky!!

Middle_of_the_Road

kimwp said:

Barkin said:

LHW99 said:

Barkin said:

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. 

Be careful with this!

While most may work this way, there are others - Skipton is one that springs to mind - that will, unless you tell them otherwise, roll it over to another product of the same type.

As always... check the account terms & maturity documents. 

But either way, the money doesn't lose its tax-free status unless you (or your husband) actually draw the money out.

True, but that wasn't the point that I was addressing.

Which is that... failing to pay attention could result in money being tied up for a period that you don't want, at a rate that you don't like, and with no way of accessing those funds without forfeiting n-days interest.

Does Skipton put it into another fixed period account? Bit cheeky!!

Coventry Building society also do this.

Barkin

kimwp said:

Barkin said:

LHW99 said:

Barkin said:

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. 

Be careful with this!

While most may work this way, there are others - Skipton is one that springs to mind - that will, unless you tell them otherwise, roll it over to another product of the same type.

As always... check the account terms & maturity documents. 

But either way, the money doesn't lose its tax-free status unless you (or your husband) actually draw the money out.

True, but that wasn't the point that I was addressing.

Which is that... failing to pay attention could result in money being tied up for a period that you don't want, at a rate that you don't like, and with no way of accessing those funds without forfeiting n-days interest.

Does Skipton put it into another fixed period account? 

If you don't instruct them to do something else, yes. 

Cheeky? Not really - it's all clear in the account documentation.