Confusion about ISA

[Friedbanana]

I’m very financially illiterate so I’m sorry if this is a dumb question

if you put in near to £20000 in a cash isa in a tax year does this mean you can’t then open a fixed rate fixed term (say 1 year fixed high interest saving account) in the same year? without being taxed?

Thanks for any advice!!

If the second account is not an ISA (you couldn't put more than £20k into ISAs in the same tax year) then you can receive interest on it up to your personal allowance (which applies across all other interest-paying accounts you might have that are not ISAs.

Your personal allowance allows you to receive some interest income without being taxed. ISA interest is totally separate from this.

Hi Friedbanana. You cannot open 2 ISAs in the same tax year. You can have a cash ISA and then separately as many high interest fixed accounts as you like- it is just that they will be exposed to tax.

Ooh thank you @Whataretheodds ! How do you know if an account is an ISA? Is it just what it is called? So for example, I was looking at Barclays fixed rate savings bonds, would that not be an ISA?

Oh right @Vol1 thank you! So would you be taxed just on the interest? And would you have to declare that in self assessment if you’re self employed?

Are you taxed on any high interest rate account even if you weren’t over the £20000? Tbh I think I have about £1000 left in my personal allowance so could I earn £1000 in interest without being taxed?

It will have ISA in the name. Unless the Barclays account specifically says it's an ISA it's not an ISA.

Everyone can earn £1000 interest without being taxed. As you know nothing be aware if you put money in for instance the entire 20k then decide to move 5k then want to move it back in to your ISA you can’t.

Oh I’ve just been reading- is the ‘personal allowance ‘ £1000 interest you can earn that is tax free?

So actually I can open a new fixed bonds account and earn up to £1000 in a year and not have to declare it?

Sorry cross posted!

Amazing thank you everyone!

Unless you are a 40% tax payer on your income as then the allowance is only £500 per year