Nervous about using flexible ISA to maximise savings interest

CeliaSeas

https://forums.moneysavingexpert.com/discussion/comment/81960345#Comment_81960345

Thank you for pointing that out, I will keep an eye out for accounts which allow penalty free withdrawal before maturity ☝️😊

masonic

Even then, the challenge will be that these accounts are launched at various times throughout the year and are often available for relatively short periods of time.

As interest accrues very slowly in the early months and the majority is back-loaded to the final months where the account balance is much higher, even missing a few months results in a dramatic reduction in interest compared with the theoretical maximum.

CeliaSeas

https://forums.moneysavingexpert.com/discussion/comment/81960875#Comment_81960875

Thanks for pointing that out.

I'll be keeping some of the flexibly withdrawn cash in a feeder account and some in small balance accounts, so I will at least be able to return that to the ISA without losing out on interest.

friolento

Without looking at the actual accounts and amounts involved, and not knowing the income tax position, it's impossible to make a conclusive assessment of the intended approach. Even then it couldn't be conclusive as nobody know which RS and ISA accounts with which terms will be available in the future.

For a 40% taxpayer, based on currently available accounts, I would say it would be a waste of time, quite likely to be loss-making. For a 20% taxpayer with less than £6,000 interest and less than £12,570 from other sources, it could yield a bit but probably not much of extra interest income provided that there are suitable RS and other accounts available at the right time, and provided the admin is timely. There's a potential risk of losing the ISA wrapper for some money, though may be anything that can't be re-deposited in the same tax year could be used as new subscription money (up to £12k from April 27) in the next. Takes a lot of record keeping.

dingling68

https://forums.moneysavingexpert.com/discussion/comment/81960305#Comment_81960305

If your profits are below the class 2 small profits threshold, you could make voluntary contributions for the year to fill your NI record