Cash ISA - What's your thoughts?

family4tunes

Hi Guys,

I'm fairly new to the ISA scene, and I hope to get more of an insight through this open topic, and a couple of questions I have. Maybe you more experienced people can give me a heads-up upon certain basic rules or guidelines that I should be aware of. Forgive my ignorance or naivety regarding any questions I might ask in advance.

(Q1)   If I already have a Cash ISA maxed at £20k this year can I still put dosh into it?

(Q1a)   If I did put more dosh into my maxed out Cash ISA would I receive the same interest rate as before, but I would have to pay tax on it?

(Q1b)   If not to both Q1 & Q1b, can I put dosh into it in the next tax year, or is it locked at £20k still?

(Q2)   Can I take out a new Cash ISA every year?

(Q3)   Is there any better method of saving money than using a Cash ISA which is low risk?


Sorry if these questions appear simple and stupid but I really am a novice to all this. Many thanks in advance for any guidance or advice these questions generate.

Albermarle

If you read through the ISA forum, this should answer most of your questions.
ISAs & tax-free savings — MoneySavingExpert Forum

Beddie

No
No
Yes
Yes
Maybe.

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

eskbanker

family4tunes said:

(Q1)   If I already have a Cash ISA maxed at £20k this year can I still put dosh into it?
No, unless transferring in from another ISA.

(Q1a)   If I did put more dosh into my maxed out Cash ISA would I receive the same interest rate as before, but I would have to pay tax on it?
As above, you can't pay any new money in, but if you transferred in from another ISA then it would probably receive the same interest rate.

(Q1b)   If not to both Q1 & Q1b, can I put dosh into it in the next tax year, or is it locked at £20k still?
You have a new annual allowance from the start of each tax year, so you can pay another £20K into ISAs.  The specific product you opened this year may not still be open for new money though, e.g. if it's a fixed term one with a limited funding window, but if that was the case then you could pay into another one.

(Q2)   Can I take out a new Cash ISA every year?
Yes.

(Q3)   Is there any better method of saving money than using a Cash ISA which is low risk?
It depends on what you're trying to achieve, but do you mean 'is there a better low risk method than a cash ISA' or 'a cash ISA is low risk so I'd like something better'?

Answers above....

jak22

Perhaps it's as simple as saying its 20K max new money in total across one or more ISAs per tax year

Suitability might just be an interest rate calculation on one ISA based on tax liability or it might be a longer term strategy considering there may  be people pleased they've contributed to (what are now called) ISAs - cash and/or S&S - over the years and so have built up a considerable tax free holding

PixelPound

low risk or no risk? Cash ISA is no risk, but there will be some S&S ISAs that use trackers and considered low risk.

eskbanker

PixelPound said:

low risk or no risk? Cash ISA is no risk, but there will be some S&S ISAs that use trackers and considered low risk.

There's no such thing as 'no risk' when it comes to money - FSCS-protected cash deposits don't have the risk of capital loss, but are likely to have inflation risk.

mebu60

For clarity, how much new money have you put into the Cash ISA this tax year? 

The assumption from the way Q1 is written is that you have put £20k in this tax year but it is a bit ambiguous given your other comments. 

family4tunes

@mebu60 Yes I have already paid in £20k on my current Cash ISA.

family4tunes

@eskbanker Thanks for your reply, it was very informative and easy to read.

family4tunes

@jak22 Thanks for that, appreciated.