Pod Insights The Martin Lewis Podcast Is the £20,000 cash ISA going to be killed? What savers should be doing NOW About this episode Full best buys – and everything you ever wanted to know about cash ISAs but were afraid to ask.
With the realistic prospect of the cash ISA limit being reduced in the near future, Martin explains what to do right now to get the most out of your savings.
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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1:49 Martin Lewis? Hello and welcome to the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. And this is a pod-only ISA special I'm doing all on my tod, taking you through some urgent decisions about ISAs for those with savings and answering a host of your questions. In this pod, I'll cover: Is the £20,000 cash ISA allowance about to be cut? And if so, what should you do? The basics of how cash ISAs work. What should you do with old ISAs? And do previous year's ISAs affect this year's allowance? Then on to cash ISAs versus shares ISAs. Which one is right for you? And then a host of miscellany, from ISAs to 18-year-olds to monthly interest ISAs,
2:32 Martin Lewis? and how ISAs interact with the personal savings allowance. Yes, I say, I say, I say, it's a lot of ISAs. Yes, basically, everything you've ever wanted to know about ISAs but were afraid to ask. Except you weren't afraid, you did ask an Altran answer. Let's get on with this. Play the theme tune.
3:07 Martin Lewis? Okay, so let's get started. Ironically, as I walked into the building on the sixth floor of Broadcasting House in central London, there's a little sign that says ISA, which I think probably stands for Internal Security Area. But it seems fitting for me today, I've always walked past it, never has it been more relevant. I want to go through all of your questions. I'm going to start with Bob on Twitter, who says, "Should I top up at the beginning or the end of the tax year?" And that is, of course, because we have just had a new tax year start on the 6th of April, so everybody has a brand-new £20,000 ISA allowance to shelter your savings or your investments from tax. So while I may have talked about this in the middle of March, it might seem like we're doing it again quite frequently. The reason is, you have a totally new allowance.
3:50 Martin Lewis? Whether you used last year's or not, that is now gone. Although if you put money in an ISA before, it'll still be in an ISA because you used last year's, and it stays tax-free year after year. But you now have brand-new money. Now, there are two reasons why I would suggest it is worth looking at putting your money in sooner. The first one happens every year, and that is, this is ISA season. In fact, we're coming towards the end of ISA season. It tends to last around March and April. An ISA season, because the tax year is ending and then a tax year is starting, is when ISA providers tend to put out better promotional deals than they normally do, so rates are relatively higher. I say relative because it depends on the underlying interest rates, but relatively higher than they normally are with cash ISAs, and you get more promotions with stocks and
4:35 Martin Lewis? shares ISAs. So you may as well take advantage of those while you can. Of course, I can't guarantee that things won't improve and therefore you might have been better to wait, but the general trend is do it now. There is another big, specific reason for doing it sooner this year.
4:53 Martin Lewis? And that's because the Chancellor, Rachel Reeves, have been evaluating cutting the cash ISA allowance. Rumours say to as low as £4,000. Now, if that does happen, and it is an if, it's thought it would be likely to be announced in the autumn budget, though with the uncertainty available right now, anything could or couldn't happen at any time. The concept behind cutting the cash ISA allowance, and it's only the cash ISA allowance, not the shares ISA allowance, is that it would encourage people to put their money in shares ISAs instead. Personally, I'm sceptical if that would work. I think many people would just keep saving but pay more tax.
5:34 Martin Lewis? You know, the decision to invest and save, it is comparing apples with steak. They are not the same thing. Everything I'm saying, it's worth noting, is pure supposition. I doubt any firm decision has been made yet. Yet it absolutely has been discussed. I am 100% positive it's been discussed. I have had meetings with the Chancellor, they are private meetings. But let me just say, I know that this is something that has been discussed. I was also asked a question about it when I gave evidence on lifetime ISAs about the potential cutting the cash ISA to the House of Commons Treasury Committee. So yes, this is definitely a suggestion that is being considered. If it happened as rumoured, it's important to state it wouldn't impact money already in cash ISAs.
6:19 Martin Lewis? It would just cut what you can put in a cash ISA in future. Now, whether if it was announced in the autumn budget, it would start immediately, you know, the day after the announcement, or it would start in the January, which we've seen with previous ISA changes many years ago, or it would start the following tax year in the April, we don't know. Nobody knows. I think it's probably fair to say Rachel Reeves doesn't know at this point yet. What all of this means is if there is a potential for the cash ISA £20,000 allowance to be cut in autumn, the sooner you put your money in, the safer it would seem. Lots of ifs and buts there, but sooner is likely safe.
7:06 Martin Lewis? Now, before I get on to answering the huge number of questions that you've sent me in, I just want to do a beginner's guide to ISAs. Your money is often nicer in an ISA. Each tax year, every UK adult, and that's somebody aged 18+, currently gets a £20,000 ISA allowance to put away money tax-free via savings, and that would be a cash ISA, or in investments, that would be a shares ISA. If you don't use the year's ISA allowance, you lose it when the tax year ends. In other words, it can't be carried over, but you've just got this brand-new allowance, this 2025-26 tax year allowance.
7:47 Martin Lewis? And importantly, once the money is in an ISA, it stays tax-free year after year. So let's just imagine this. Imagine you put £20,000 in two tax years ago, and you put £20,000 in a couple of weeks ago, just before the end of the last tax year. And you could now put in another £20,000, if you were lucky enough to have this much money. You would have £60,000 plus the interest in cash ISAs protected from tax. Now, just in case you're a very beginner to ISAs and how this works, I would say that understanding ISAs is a piece of cake, and you'll understand in a moment why I use that particular phrase. I've been using this as my go-to analogy since 2001, so just gat over it.
8:32 Martin Lewis? Gat over it. Okay, no, sorry. Let me do the analogy. So I want you to picture a cake, let's say a chocolate cake, because chocolate begins with a C, so does cash, so that's your savings, your cash ISA. Though equally, it could be a strawberry cake for your shares ISA. Normally, it's just sitting there, and the interest is hopefully accruing, but the problem is the tax collector can come along and take a bite out of it. Om.
8:59 Martin Lewis? And the bite would be from your interest because it is the interest that's taxed. Savings themselves aren't taxed, it's the interest you earn on savings it is. Now, think of an ISA wrapper like a protective piece of cling film you can wrap around the cake. You get £20,000 of it each tax year. Once your cash is inside, nothing has changed. The cash in the savings is still the same. A cash ISA is just a savings account. The only difference now is the tax collector cannot eat any of it. And once it's in that ISA wrapper, the tax collector can't eat any of it. This year, next year, the year after, the year after that, until you take the money out. Now, some people think when I say until you take the money out, that means they'll be taxed when they take the money out. I don't mean that.
9:43 Martin Lewis? I mean, if you take the money out of a cash ISA, there's no tax to pay in doing that. But if your money is then in normal savings and continues to earn interest in normal savings, it becomes taxable again. So as long as you keep it in the cash ISA, you don't pay any tax on it. And that is the cash ISA basics. Now, let's do your questions.
10:03 Martin Lewis? So my next chapter that I want to go through is short-term bonus rates that many people have been asking about. We'll start with Neil who asked on Facebook. He said, "On your most recent TV show, you refer to the three best interest-paying cash ISAs as all having rates boosted for the first three months. Presuming these all last for nine months, should I open one of them to then transfer to the second one, then transfer to the third to get the three-month bonus rate from them all? Or is that not allowed? Is there a better way of maximising the highest rates?" Wow, okay. Actually, really interesting suggestion, Neil. Effectively becoming a cash ISA serial switcher or more technically a serial transferrer as you'd have to transfer the money from one to the next to the next. I don't think it'll work.
10:47 Martin Lewis? And I don't think it'll work for the simple reason that these bonus rates are only available in the short term and much of it is for ISA season. So I simply don't think that if you get one of them now in three months' time, you can guarantee the next ones are available. And in fact... I think we might see them ending. And the reason I think we might see them ending is because I've started to get quite negative on them and in my other work and my web work, let's just say, because I can't talk about it in detail, I've started to reorder my Best Buy tables so that these bonus rates, which have been jemming the Best Buy tables, so they have an underlying rate of 3%, but then they add, you know, 2.5% on top of it. So the headline rate is 5.5%, but you only
11:29 Martin Lewis? get that for three months and then bang, the rates drop down. So you're only earning 3% for the rest of the year. I just don't think they're as good as a stable rate that's higher. So what I've started to do, for example, there's one right now, Moneybox pays 4.2% variable plus a three-month newbie bonus of 1.51%. So its headline rate in many Best Buy tables is 5.71%. But if you average that over the year, which is how I'm now comparing them, I call it the effective one-year rate, it's 4.6% variable and there are other accounts that are better. More so, there's a Plum account, its underlying rate is 3.54%, but with the newbie bonus, it goes up to 5.68%. But if you average that over the year, it's
12:11 Martin Lewis? only 4.1% variable. And because I think some of these, because a lot of cash ISA traffic comes through my site, I think some of these have been done to be top of our Best Buys. As I've changed the way that we're doing Best Buys, so I put those last and I can't, unless the effective rate over one year is strong, actually this week already, two of the big providers that were doing it have now shifted into more longer-term systems. So I don't think that would work. I do think that's quite, it's an interesting question. I must do Best Buys later, note to myself, and I will come up with the Best Buys later. Let's do Alice on Twitter. Why are so many providers dropping their ISA rates after three months? Far more than any other year. Because this was a new trick to jemmy the Best Buy tables and when it worked, they were doing it. And now I think it's not going to work for them
12:56 Martin Lewis? anymore. They'll probably stop doing it. Jane on Facebook. When I look at best deals for cash ISAs, I haven't heard of some of the providers. How do I know these are kosher? It's a very interesting question and it's one I get a lot. Now, the first thing to say is any proper cash ISA will have the full UK Financial Services Compensation Scheme protection. That means if you have up to £85,000 per person in that financial institution, and it's worth noting in that financial institution, so if you had a cash ISA with it and savings with it, they would all, the combined limit is £85,000,
13:37 Martin Lewis? then in the unlikely event one of them were to go bust, your money would be protected. Now, there are some ifs and buts when it comes to these newbie bonus rates, that some of the newbie bonus rates are seen as promotional marketing and they're put in a separate account, so they're not protected, although your main capital and your main interest is protected, but that's on the edge. So if you haven't heard of them, as long as it is properly a cash ISA, and there are some people who sort of offer ISAs with cash elements, but they're not cash ISAs, that you have to be slightly protection of the protection about that. For example, you put money in an investment ISA and it has a cash holding account, but as long as it's a genuine cash ISA, then you are protected. But what I started doing a couple of years ago, and I will do it when I do my best buys,
14:22 Martin Lewis? and if Tom, who's producing today, he's actually the big boss producing me today, Tom will remind me, I must do best buys later, is I will also give you some of the big names, because I know people like security with their savings, of who are the big names who are offering decent rates, so I'll run through those as well.
14:39 Martin Lewis? Next chapter, big one. What should I do with old ISAs? Do previous year's ISAs affect this year's allowance? And I've got a host of questions from you on that. Let's start with Keith on Facebook. I've just taken out a one-year fixed-term ISA. I did this on the 4th of April 2025 and maxed out the allowance. Can I now take another ISA? If so, does it have to be with the same provider? Absolutely, you can take another ISA. Because we're in a new ISA year, you've got a brand-new £20,000 allowance. If you put 20 grand in on the 5th of April, technically you're allowed to put another 20 grand in on the 6th of April, because the 5th of April was so last year, and the 6th of April is this new tax year.
15:21 Martin Lewis? So yes, you can do it, and no, it does not have to be with the same provider. You can do that. You can also equally set up a totally new cash ISA with a new provider. You can equally set up a totally new cash ISA with a new provider and transfer the money from the old provider into the new provider as well. John on Twitter, what should I do with previous ISAs that I have? Well, assuming that they're easy access, I think the issue is that you say previous ISAs. And the reason I say that is the more ISAs you have from previous years, first of all, rates, good rates tend to only last one or two years, and sometimes even less than that. So if you've got an ISA, a cash ISA you set up three or four years ago, the rate is probably pants. That's the first lesson.
16:06 Martin Lewis? The second thing is, you've got lots of different cash ISAs administratively, it's quite difficult to make sure that they're all paying decent rates and you have to do a lot. So what I would tend to do is consolidate them into one ISA. I use the phrase consolidate, that's not a technical term in this case. What does that mean? It means you open up a new ISA, whether or not you're putting money into it is irrelevant, new money into it. You can do this even if you've only got money in old cash ISAs. You do a transfer form which will be on the part of the new ISA, it'll say you can do transfers, you fill in all your old ISAs and you move them all to a new ISA that is A, hopefully paying a good rate, and B, that means administratively, you now have all
16:48 Martin Lewis? your ISAs in one place, or all your old ISAs in one place, that you're getting a decent rate on. So once that rate goes pants, because you should always monitor, because any variable account, the rate can plummet, then you can just transfer it again, all in one big lump. The only thing to watch is if you've got it enough and you have over £85,000 worth, then you might want to spread it across more than one ISA because you only get that Financial Services Compensation Scheme protection up to that level. Miss A on Twitter, can you keep transferring matured ISAs, stake balance is now £25,000, to a new ISA and add new money to it up to £20,000? Yes. Mark on Twitter, shortest answer I've ever given. Mark on Twitter, my confusion starts
17:31 Martin Lewis? on year two, when you have the original £20,000 from the previous year and you add another £20,000 in the new tax year. If you transfer to another provider, can't you transfer the entire £40,000 or does the 20k per year limit apply?
17:47 Martin Lewis? So let's go very plain here. As I always say, a cash ISA is simply a savings account you don't pay tax on. I'm only saying that because I realised I hadn't said it earlier.
17:59 Martin Lewis? You get £20,000 per year. The limit is on the money you put in. So you can put in up to £20,000 of new money in a tax year. Everything else does not use up your limit and is not governed by the tax year rules. So absolutely yes, you can transfer the entire £40,000. There's no limit on transfers. The £20,000 rule doesn't apply. Once money is in an ISA, you've used up that year's allowance. It may be five years ago's allowance that you've used up. Once it's in an ISA, it stays tax free year after year and it can be moved and transferred. And as long as you're not adding money to it, you're not using up your allowance. You can add money up to it, into it, but only up to the £20,000. Fran on Twitter.
18:45 Martin Lewis? I've ended up with a number of small ISAs that mature at different times that I've been rolling over each year. What I'd love to do ideally is combine them, but can't work out how to do this. So reading between the lines, if they mature at different times, they are fixed rate cash ISAs. So you've locked in a guaranteed rate for a set time and then they're going to mature. Here's what I'd suggest you do, and this is a bit of a compromise in doing this, to be honest, because what I would do is for a year or so, I would move them all into easy access cash ISAs. So I'd pick a good easy access cash ISA and then when each one matures, I would transfer it into that easy access cash ISA.
19:27 Martin Lewis? So that after a year or so, once they've all matured, you have them all in one place in an easy access cash ISA with the best possible rate. Once you're done, or whenever you feel ready, at that point, you can then transfer that easy access cash ISA into a fixed rate cash ISA. So administratively, that's by far the best solution. Then you've got them all in one place and it's much easier to manage. But of course, that means for the time they're in the easy access cash ISA, you won't have the guaranteed rate that you get from a fix.
19:58 Martin Lewis? Okay, it's time for me to do the best buys for you. Just a quick warning at the start though. We're in ISA season. Rates aren't changing by the day, they're changing by the hour. So I'm going to give you the best rates available at the time of recording, but some of these may well have changed by the time you listen. I can't give you where I would go to go and find the best rates if I was looking them up for instant, but I'm sure you can work out there are some good sources of trusted information available online where you can go and look them up for yourself. So let's start first with the top easy access cash ISAs. All of those I'm about to mention, because they're easy access, that means the rate is variable. It can change. So if you get one now, it doesn't mean that rate will be the same in four or five months' time. You need to keep your eye on it.
20:43 Martin Lewis? But with all of them, these are cash ISAs where you can put your money in and you can take it out whenever you like. So all of those I'm going to mention have unlimited withdrawals, because sometimes they say you can only do three or four penalty three withdrawals a year. Let's get into the best buys.
21:00 Martin Lewis? So the very top rate is trading 212 at 5.04% with a minimum £1. Then you've got Moneybox at 5.03%, minimum £500. Tembo at 4.8%, which is app only, minimum £10.
21:21 Martin Lewis? Now, all of the accounts I'm mentioning do allow you to transfer old ISA money in, although Tembo currently has a delay on transfers because it's been so busy. Now for the top bigger named easy access cash ISAs.
21:41 Martin Lewis? Leeds Building Society is 4.41% variable with a minimum £1,000. Marcus, which is owned by Goldman Sachs, app only, is 4.3% variable with a minimum £1. And the Post Office, which is probably the biggest of the big names that I'm going to mention that has a decent rate, is 4.05% with a minimum £100.
22:10 Martin Lewis? Now, a few of the accounts I've mentioned do have bonuses that last a year of half a per cent or 1 per cent. I haven't pulled those out for you because I don't think it's that relevant because the rate is variable anyway, but I do want to talk to you about the post office is one year bonus, because its one year bonus is 2.8 per cent, meaning of its 4.05 per cent interest rate, 2.8 per cent of it is bonus and 1.25 per cent of it is the underlying variable rate. Now, you can look at this two ways. You can say, well, that's bad because in a year the rate is absolutely going to plummet and I will need to ditch and transfer because it's going to be a pants rate then, almost certainly.
22:50 Martin Lewis? But I tend to look at it when you've got such a big bonus as a year-long minimum rate guarantee. We don't know what's going to happen to UK interest rates, although the prediction is then likely to drop this year, but we do know with this account, you're going to earn at least 2.8 per cent for the year because that is the bonus, with the exception that if we went into the extreme situation of negative interest rates. So I would tend to see it as a 2.8 per cent minimum bonus and actually paying 4.05 per cent with the variable element on top, which isn't a bad deal.
23:26 Martin Lewis? Now, let me move on to top fixed rate cash ISAs. Here, the rate is locked in. They cannot drop the interest rate on you.
23:42 Martin Lewis? So, for one year, you've got UBL UK at 4.31 per cent, minimum £2,000. Zerpa at 4.3 per cent, minimum £1. And the big name here is Santander at 4.25 per cent, minimum £500. For a two-year fix, Progressive Building Society, 4.3 per cent, minimum £500. UBL UK, 4.26 per cent, minimum £2,000. And the bigger name here is Santander, 4.1 per cent, minimum £500. Now, what's interesting about fixed rate cash ISAs, unlike fixed rate normal savings, is the cash ISA regulations mean they cannot lock your money away. So normally, when I talk about fixed rate savings, I say you lock your money away in return for a guaranteed rate.
24:26 Martin Lewis? With fixed rate cash ISAs, they have to allow you access to your money, but they can charge you an interest rate penalty normally of 90 or 180 days. So you lose up to half a year's interest. So you really don't want to get these if you think there's a realistic and obvious and common chance of you having to withdraw your money. But the advantage of them is if you think there's a very slight chance you need to access your money, then a fixed rate cash ISA will always allow you to do that if you take an interest rate hit.
24:59 Martin Lewis? And those are my cash ISA best buys.
25:06 Martin Lewis? Let me move on to my next chapter now, which is your questions on cash ISAs versus stocks and shares ISAs. Lyn on Twitter, are you safer building up a cash ISA or going into a low risk investment ISA? Well, look, let's just remember for the start, risk is not a bad thing. Risk is a measure of potential variation in outcome. If you go into stocks and shares, you do it in the hope you will have far bigger gains than putting your money into savings, but at the risk you will have far bigger losses, or in fact you'll have losses where there's less potential for that, of course, in savings. So of course, a cash ISA is less risk than a low risk investment ISA. A cash ISA, you get a set rate of interest.
25:51 Martin Lewis? You know what the rate of interest is and your deposit is protected. When you go into a stocks and shares ISA, your capital is at risk, which it isn't as long as you're within the financial services compensation scheme with a shares ISA. So, but, but the fact that one is lower risk does not mean that's right or wrong for you. In the long term, many people will be better off putting money into the markets because as long as you pick a nice widespread of investment, then you should spread out the risk and the markets tend to outperform savings in the long run. But there is always risk there. Next question, where I have sadly missed out the name of the questioner. So I can't tell you who asked this, but someone did. This is what happens when you're doing it by yourself.
26:36 Martin Lewis? Is the £20,000 limit split across all types of ISAs? Yes, you are allowed to put £20,000 into ISAs in a year. That could be all £20,000 in the cash ISA, all £20,000 in the stocks and shares ISA, or it could be £10,000 in the cash ISA, £10,000 in stocks and shares, or £15,000 cash ISA, £5,000 in stocks and shares, and you don't have to put the whole amount in. So you have up to £20,000 you can put in collectively in all types of ISAs, including the lifetime ISA, including innovative ISAs and all of those. £20,000 is the annual total ISA limit. It can be split across all of them.
27:14 Martin Lewis? Next question is from Louise on Facebook. How to start a stocks and shares ISA? The difference between investing in funds and individual stocks. I know this isn't your area of expertise, but feel there are a lot of us who could do with understanding the basics. We were taught about interest at school, but not investing. Well, Louise, you are absolutely right. It is not my expertise. I'm pro investing, but it is not what I do. Which is why on the podcast on the 20th of March, I brought an investment specialist on and we talked all about stocks and shares ISAs, where you start them and how you do them. It would be inappropriate for me to repeat them now, as that is a regulated financial advisor who came on to talk on that subject. So please go and listen to the 20th of March podcast.
27:56 Martin Lewis? It's 34 minutes in when he starts talking about stocks and shares ISAs. And hopefully that will answer your questions.
28:06 Martin Lewis? Now let me get on to my last section, which I've titled appropriately miscellaneous. And I think I've said that the right way. Miscellaneous, there's lots of good questions in here. So let's go through, I've got Ryan on Twitter. Me and my partner have £50,000 left over from a house move. It will be used to do renovations long term. What should I do with it meantime? Should we both put £20,000 each into an ISA? What would we do with the remaining £10,000? I actually thought that this is a fascinating question, because it shows you the big benefit of ISAs. Now let's remember. Every basic rate taxpayer is allowed to earn a thousand pounds in interest in normal savings and not pay tax on them. If you're a higher 40% rate taxpayer,
28:51 Martin Lewis? you get £500 of interest you can earn in normal savings and not pay tax on them. If you're a top 45% rate taxpayer, you don't get this. If you're a non-taxpayer, well, your savings interest counts as your earnings, so it would just push up your normal tax-free allowance. Anyway, there's also a thing called the starting savings rate, which I also talked about in the 20th of March podcast, which means those who have low incomes but large amounts of savings interest can in some cases earn up to £18,570 a year of total earnings and interest tax-free. But let's go back to Ryan's question. I'm moving off the subject. So the reason this is interesting, assuming that your partner, you and your partner
29:31 Martin Lewis? both working and earning and are therefore taxpayers. The advantage of ISAs isn't just that the money you put in them is tax-free year after year, it's that the money, the interest earned, does not count towards your personal allowance, that's the normal tax allowance, £12,570 that anybody can earn from earnings or savings interest or anything else tax-free a year, nor does it count towards the personal savings allowance, the £1,000 of a year that you can earn in savings tax-free. So if you both put £20,000 each into an ISA, that's all tax-free, and currently the best easy access cash ISA rates are beating the best normal savings anyway, so you'd be earning the best rates in there. So there's no rate
30:14 Martin Lewis? sacrifice by putting your money into a cash ISA. The remaining £10,000, well, the interest that that generates is the only interest that would count towards your personal savings allowance. So if you put that in a top 5% account, even if you were a higher rate taxpayer, that would generate £500 which is in your personal savings allowance, so that would be tax-free too. And that's the benefit of ISAs demonstrated really well. If you put all that money in normal savings, let's say you had £50,000 generating 5% interest, that's £2,500. Even if you split it each and you were both basic rate taxpayers, that still means there's 250 quid of interest each that you would be paying tax on. So putting it into a cash ISA, assuming you just want easy access savings and that's your choice, which you probably do
30:59 Martin Lewis? because you want to hold the money without taking a risk for renovations coming up at some point, would seem to be, from the very scant information you've given me, the right move. And then the other £10,000 you just put into a top savings account. Peter on Twitter. If you choose to have your interest kept in the ISA, does this affect how much you can put in next year? No, no way, not at all. The ISA allowance is on the amount of money you put into the ISA. You are not putting interest in. The provider is putting interest in. The interest you get on your ISAs is within the ISA wrapper, does not use up your £20,000 annual allowance and just is added on top. So it is not an issue in any way. Gino on Facebook. If you put the full £20,000 into an ISA
31:42 Martin Lewis? and then take £5,000 back out, so net £15, put 15 grand in the ISA for the year, are you allowed to put the £5,000 back in the ISA later that year? Or do you have to wait until your allowance refreshes the following year? The answer to that is yes and no. If you have a flexible ISA, which is up to the provider whether they offer a flexible ISA, then you can do exactly what you've said. You could put 20 grand in, take 5 grand out. And as long as you then return the 5 grand within the current tax year, you would still only count of having used up your £20,000 allowance. So you can take money out and put it back in, in a flexible ISA, within the current tax year.
32:26 Martin Lewis? However, it is provider specific whether they offer that. So some providers will not offer that facility. You would need to check. Julie on Facebook. I'm now at retirement age, so I want my ISA to give me a monthly payment. Could you please do a comparison of them for the best interest rates that offer this? I spent ages scrolling through the terms and conditions to find out. So I've already done the best buys for you. Let me just go back to my best buy list. And I admit, I do have that imprinted in front of me. And I'm just going to tell you which ones pay monthly interest. I'm not going to go into all the details, but I'll give you the names quickly and you can listen back to the best buys earlier. Trading 212 has a monthly interest option. Tembo has a monthly interest. Marcus has a monthly interest option.
33:08 Martin Lewis? In the fixes, Zopa, one year fix has a monthly interest option. UBL UK, two year fix has a monthly interest option. So with all of those, you could choose to have your interest paid monthly. You effectively get the same interest rate. But obviously, if you take the money out, then you wouldn't get compound interest on the money that you've taken out. And you can do that if you want to access the money to work it exactly that way.
33:34 Martin Lewis? We're in the final stretch now, folks, and good because my throat is going. I tell you what, when you do all the talking by yourself, it can get a little bit dry. John on Facebook, if you have an ISA and are fully utilising it, do you still get a personal allowance for interest received on non-ISA savings accounts? I'm a high rate taxpayer with a fully utilised ISA, so I'm paying monthly into a regular savings account because my ISA is full. Yes, absolutely. Your ISA allowance is its own separate entity. It does not count towards your personal savings allowance. You have that totally separately as well. Andrew on Facebook, will I be better off paying tax on a high rate of interest rather than a lower rate cash ISA? I mean, possibly. If you had a very low rate cash ISA and a very high paying normal savings account,
34:18 Martin Lewis? then even after tax, the normal savings account would be more lucrative than the lower rate cash ISA. But why would you have a lower rate cash ISA? Just to put this in perspective, I said earlier the top easy access rate cash ISA pays 5.04%. Well, the top easy access normal saving pays less at 4.75% with Atomback. I said before that the top one-year fixed cash ISA pays 4.3%. Well, the top fixed savings does pay more at 4.65%. But you take 20% off that and you're earning less than 4%, so the cash ISA still outpays it. So, you know, the technical answer to your question is yes, if you've got a very low
35:00 Martin Lewis? rate cash ISA and you compared it to a very high rate normal savings account, then it would pay less. But why would you do that? Why wouldn't you just make sure that your money was in the top cash ISA? Either by putting your new money in there or by transferring your old money into there. Jennifer on Facebook, what's the best ISA for an 18-year-old to start, ideally saving towards the first house? Well, that would be a lifetime ISA. A lifetime ISA, you can put up to £4,000 per tax year in. You can open it aged 18 to the age of 39, to the last day before your 40th birthday. And for the up to the £4,000 you put in, the state will add a 25% bonus to be used on a first time property, assuming you've never owned before. It's an individual account.
35:42 Martin Lewis? So if you were doing this with somebody else who was a first timer, you could both do this. And if you were buying with somebody who already owned a property, you can still do this. So that means up to a thousand pounds a year added, as well as the interest, on top of what you put in a lifetime ISA. So that sounds really good, and it is really good. You have to have had the ISA, the lifetime ISA, open a year before you can get the the bonus as a first time buyer. So what I would suggest to anybody aged 18 is even if you don't want to put the money in now, open it with a pound just to get the clock ticking. The big problem with a lifetime ISA though, is if you withdraw the money for any other reason than using it for a qualifying first time property, you pay an effective penalty of 6.25%.
36:26 Martin Lewis? Or you have to leave it till age 60, when you can also then take it out without paying that effective penalty. So in other words, you don't get the bonus and you lose 6.25% of your money if you take it out for not buying a first time property. And I said qualifying first time property, which means a property that costs under £450,000. And to be very clear, if two of you are buying it together with LISAs, it's still a property under £450,000. You don't double the property value. That is the qualifying property. Now, that amount has not gone up since 2017, which for me is a problem, and I've campaigned on it. And I think the way it works, for those people who are over that limit, who are still buying a first time house, is is not good. I mentioned earlier, I've given evidence to the Treasury Committee on the issues on this.
37:06 Martin Lewis? But if you're in an area where the first time buyer is very unlikely to buy a property over £450,000, then you want to have your money in a lifetime ISA. If you're not, and you think you would be buying a property over £450,000, well, then there's a risk of the 6.25%, you just want a normal cash ISA would be the next best place.
37:27 Martin Lewis? Charlie on Facebook, would like advice on my son's money from his CTF. It's currently just sat in his bank account doing nothing.
37:34 Martin Lewis? So you must have withdrawn it then, I presume? Because if it was in a child trust fund, it should be automatically converted into a cash ISA. Well, Charlie, your son could do a lifetime ISA, as I've just talked about, or at least just get the money into the best paying
37:49 Martin Lewis? savings account that you possibly can while you think about it. And right now, cash ISA rates outpay normal savings rates. So that means putting it into the top cash ISA.
38:07 Martin Lewis? That's it from me for this week. I do hope you've enjoyed it. If you have, please suggest to friends and family, dogs and pigeons that they listen to the podcast do. They can subscribe to it. We do tend to put out a new episode every Wednesday or Thursday. If you haven't enjoyed it.
38:25 Speaker 05 Martin Lewis is the founder of moneysavingexpert.com, but other consumer and price comparison websites are available. You can get in touch with Martin's podcast team by emailing [email protected] . The offers and rates mentioned in the podcast are correct at the time of recording. However, if you're listening on demand, it's worth double checking as the details can date.
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