cash ISA for elderly parents with income to drip-feed

indigospooky

Parents in their late 80s, have maximum allowed in premium bonds, but thanks to robust pensions and attendance allowance, coupled with a very restricted lifestyle they have more money coming in every month than they can spend.

I'm assuming a variable rate cash ISA would be the best option (don't think the fixed rates allow you to make deposits every month or couple of months) but is there anything else I should be thinking of? I will have to set this up and manage it for them so I really want to be sure I'm doing the best things for them that I can.

twopenny

Yorkshire do a variable rate where if you take money out you can replace it. No limits other than you can't put more than the extra new money allowed. Is that still £20,000 for pensioners.
But of course if you're starting from scratch it may not be so easy.

I also saw a couple that are doing the interest monthly again. So for a new one putting in a lump sum that may work. See if it's paid into your bank account is something to consider.
 I use the main players with branches so that would be Skipton, nationwide, Yorkshire and Halifax here. 

Descrabled

Dudley B S do ISAs, including fixed rate ISAs, that allow deposits over the full financial year; so this year up to 5th April 2026. The 2y and 3Y are each £100 to open and pay 3.65% interest. Presumably they will offer similar ISAs from 6th April 2026 for the 2026-27 tax year. Online or Branch access. I do not have any of their ISAs.

Shawbrook and Kent Reliance both have fixed rate ISAs that allow payments to be made over the full life up to their maturity date. However, both require an initial opening payment of at least £1,000. I have fixed rate ISAs with both of these banks

eskbanker

indigospooky said:

Parents in their late 80s, have maximum allowed in premium bonds, but thanks to robust pensions and attendance allowance, coupled with a very restricted lifestyle they have more money coming in every month than they can spend.

I'm assuming a variable rate cash ISA would be the best option (don't think the fixed rates allow you to make deposits every month or couple of months) but is there anything else I should be thinking of? I will have to set this up and manage it for them so I really want to be sure I'm doing the best things for them that I can.

ISAs aren't always the best answer, so it'll depend on their taxable income and the extent to which they use their allowances, i.e. if they have the £1K personal savings allowance and don't earn more than that in taxable interest then taxable accounts might beat ISAs.  Regular savers, in particular, will typically pay the best interest, but if you need to run multiple products then it can be more time consuming.

Albermarle

Descrabled said:

Dudley B S do ISAs, including fixed rate ISAs, that allow deposits over the full financial year; so this year up to 5th April 2026. The 2y and 3Y are each £100 to open and pay 3.65% interest. Presumably they will offer similar ISAs from 6th April 2026 for the 2026-27 tax year. Online or Branch access. I do not have any of their ISAs.

Shawbrook and Kent Reliance both have fixed rate ISAs that allow payments to be made over the full life up to their maturity date. However, both require an initial opening payment of at least £1,000. I have fixed rate ISAs with both of these banks

OP - Just to be 100% clear, where a  savings provider such as those mentioned above, will allow payments during the fixed term, you are still limited to maximum £20K per financial year in total.

friolento

ISAs can not be held as joint accounts. So if ISAs were indeed appropriate for your parents, you'd probably need two

For a complete list of currently available products, see https://moneyfactscompare.co.uk/

If you want to consider Regular Savers, check .https://forums.moneysavingexpert.com/discussion/6576962/the-top-regular-savers-discussion-thread/p1

lr1277

Let me tell you about my experiences with my parents.

Whilst my dad was alive, most of mum and dad's savings accounts were jointly held. They also each had their own income tax allowance. When dad died the joint accounts reverted to mum. So she got all the interest. Plus she got the widow's pension from her husband's employer and his share of the state pension.

Mum went from paying no tax as all her combined incomes were within the income tax allowance to paying a few thousand in income tax. The amount of tax payable was disconcerting for mum. 

I advised my mum to only get easy access accounts both ISA's and non-ISA's as she may never know when she will need the money. I could not recommend a fixed term where the money was not available for 1,2,3,4 or 5 years. 

We only realised the tax position a couple of years after dad's death because of the timescales involved in submitting SA tax returns. Since then mum has put the full £20k into a cash ISA every year thereby reducing her tax liability.

So in your position, I would advise your parents to each open an easy access cash ISA both for this tax year and the next tax year starting April 6th. That is potentially £80k they can save where the interest does not count towards tax purposes.

A regular saver ISA might be a possibility if the withdrawl conditions meet your parents' needs. The internet suggests a few building societies that offer them but they are not something I have investigated.

As we move more of mum's money into cash ISA's, this year we are looking into moving money from low paying accounts to higher paying accounts. Yes more interest and hence tax might be generated but this is offset by the reduced taxable income because of the money in the ISA's. 

Hope that helps.