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HoppieMaky Posts: 4 Newbie
8 January at 1:21PM in
Hello. I recently found myself in danger of paying income TAX on my savings. I looked into my options and decided to place my £20,000.00, the maximum allowed, into a Trading 212 Cash ISA. This decision was entirely based on the advice on MSE but I may have missed the gist of it completely in which case I apologise for the following. On the ISA pages there exists this paragraph: With particular reference to the last sentence regarding a "monthly income" I mistakenly believed that this was what I was doing. I am entirely wrong. After one month of earning interest I withdrew the value of interest but was mistified when although I had no trouble moving the cash interest back to the bank acccount that I had moved it from in the first place, the consequence was that my ISA holding fell by the same amount. I queried this with Trading 212's chat communication tool and was reminded that I could replace the money anytime I wished. It took a while of conversation but eventually I was advised that I could not remove just the interest not even annually. I have yet to find out how I can do so, the indivitdual replying was struggling to explain their process, and I couldn't be more confused. What's the point of an ISA earning interest if when I want it I can't access it?
"With easy-access cash ISAs, interest is usually paid into the account either monthly or annually. If you choose an account which pays interest annually, you won't be able tousethe interest until the year's up – so there's a long wait. If you'd prefer to use it sooner, for example if you want a monthly income stream from your interest, choose an account which offers a monthly option"
My question, finally, is how can I and with which ISA account can I open (as the paragraph above suggests) that offers interest as an income stream? My guess is that due to Trading 212's policies ( their own T&C's suggest this) or simply TAX restrictions, which I could imagine would be difficult to manage, but I genuinely do not understand. Please help
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eskbanker Posts: 34,534 Forumite
8 January at 1:45PM
Not sure I'm understanding the problem - you paid £20K into the T212 cash ISA, which credits interest monthly, so after a month the balance should have been something like £20,080, from which you withdrew the £80, leaving the original £20K in there, is that right?
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Alexland Posts: 10,020 Forumite
8 January at 1:58PM edited 8 January at 2:03PM
Yes sorry I don't understand what you are saying either.
If you want to gradually withdraw the interest you wait until it is added at whatever frequency T212 do this on their Cash ISA product, and the ISA account will go above £20k which is fine, and then you withdraw it. Or you could just leave it to accumulate in the ISA wrapper so you are then earning tax free interest on the tax free interest which is also allowed within the ISA rules.
If you do withdraw the interest to your current account you wouldn't expect the interest still to be showing in the ISA account as you have moved it out?
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WastedWords Posts: 83 Forumite
8 January at 3:13PM
Are you looking at the ISA contributions made? As the T212 is a flexible ISA, if you withdraw, your current year "used" allowance will drop accordingly, and the "remaining" allowance will increase by the amountwithdrawn.
T212 interest is currently paid daily but is moving to monthly (at the end of January))1
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HoppieMaky Posts: 4 Newbie
8 January at 4:54PM
My apologies, I knew I had explained it badly.
Allow me to try to be more thorough in my explanation.
This month I withdrew the interest that had been earned, £81.62. I had no wish to withdraw from my used allowance.
The 'Total value of my Cash ISA' had stated £20,081.62 before my withdrawal.
After withdrawal, the 'Used Current Tax-Year ISA allowance' (as you picture above) fell to £19,918.38 although the Total value remained at £20,000.00.
The "Remaining Current tax-year allowance" showed £81.62.
I hadn't managed to withdraw anything. There isn't an option or button on the app to request a withdrawal of interest. Anyway I put the £81.62 back and tried to communicate with Trading 212 as to how I could take out my interest.
Eventually, during the 'chat', they admitted that I could not select to withdraw only interest.
Incidently so far as I can see, despite the total value of my Cash ISA having risen today to £20,128.22, the daily rate has not altered. Interest is not earning interest. I think the interest is earned only on the £20,000.00.
I asked during the 'chat' if I could remove the interest at end of tax year. The question was avoided.
Which brings me back to this question again. Is there or has there ever been a cash ISA account that does offer the option to withdraw the interest earned on a monthly basis as the post copied from MSE seems to allude to.
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dcs34 Posts: 603 Forumite
8 January at 5:12PM edited 8 January at 5:13PM
Not sure what the issue is.
You withdrew the £81.62 and because the ISA is flexible this means the used allowance and remaining allowance figures were adjusted to show you could repay this money back in before the end of the tax year if you choose to - the £20k deposit is always the net current position.
The difference with a non-flexible ISA is that you wouldn't have an option to pay any withdrawn interest back into the account before the end of the tax year - the first £20k paid in as all that is allowed.
There aren't separate pots for "customer deposits" and "earnt interest" in the account, it's all one big amount. So when a withdrawal is made T212 are agnostic as to whether it is the interest or deposits being withdrawn.
The money all looks the same to anyone else, so does it really matter?
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Alexland Posts: 10,020 Forumite
8 January at 5:25PM
I think I understand.
So the concern is that when withdrawing from the ISA it is showing that you now have the opportunity to contribute back into the ISA which doesn't feel like it is making full use of the annual allowance?
I think you would prefer it was considered that only the interest had been withdrawn and the contribution allowance had still been fully used. That would be the case on a standard non-flexible ISA.
There is no downside to this being a flexible ISA as it is giving you the opportunity to contribute the interest back into the account to make the most of your allowance later in the tax year.
The best way to use of all the annual ISA allowance is to never to withdraw the interest and let it accumulate in the ISA account to build a big tax free savings pot.
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WastedWords Posts: 83 Forumite
8 January at 6:30PM
I also fail to see what the issue is.
The remaining allowance is only a guideline based on what T212 sees. If you had 10k in T212 ISA and 10k in an ISA somewhere else, T212 would show 10k used and 10k remaining, even though you would have actually used your full 20k for the tax year.
The 20k displayed in my snapshot is from my Cash ISA but my actual ISA contributions this year have been split between my Cash ISA andT212 S&S. Both show 20k used.1
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sausage_time Posts: 1,132 Ambassador
8 January at 7:19PM edited 8 January at 7:19PM
Think of it this way. The Flexible aspect really does give you more options. If you find you have a spare £81.62 before the end of the tax year you can add it back to your ISA.
If you choose not to, you have £20k (plus more interest by April) in your ISA and the £81.62 in your pocket. So conceptually, you have withdrawn your interest to date.
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eskbanker Posts: 34,534 Forumite
9 January at 12:59AM
HoppieMaky said:
Which brings me back to this question again. Is there or has there ever been a cash ISA account that does offer the option to withdraw the interest earned on a monthly basis as the post copied from MSE seems to allude to.
It still seems to me that you're getting confused, in that you clearly can withdraw your interest on a monthly basis from your T212 ISA, but have to do so manually by requesting withdrawals of a specified amount (which you can obviously set to that month's interest), rather than having the option to press a button labelled 'withdraw interest' that does it all for you.
However, there are ISAs which do offer the facility to have monthly interest paid away (the search term you'd be looking for) into an external account fully automatically, including, for example, Ford's one:
Interest can be paid yearly or monthly and can be paid into:
- This Flexible Cash ISA
- Any other Ford Money savings account you have (subject to its Terms and Conditions)
- Your Connected Bank Account
https://www.fordmoney.co.uk/savings-products/flexible-cash-isa#
Up to you whether the interest rate sacrificed is worth it though, and you might still find the used/remaining allowance figures confusing as it's also a flexible one....
When searching for comprehensive information about savings products, Moneyfacts is a valuable resource, although in this case it's only viable to filter easy access cash ISAs that pay interest monthly, rather than specifically those that pay it away rather than compounding it, but you can click on the relevant provider links to see further detail:
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patpalloon Posts: 145 Forumite
9 January at 9:42AM
I'm thinking about switching my cash ISA from Zopa to T212. I've used up my allowance for this year. Are transfers straightforward?
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