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Original poster

What on earth are you supposed to do when a fixed-rate ISA ends?

52 replies

Liesmorelies · 22/12/2025 08:45

Through inheritance I had £20k to invest 5 years ago - more money than I've ever had. Obviously interest rates were pants at the time so it was 1.5% and has now matured (or will next week), giving me approx £20 800. I want to reinvest most of it and thinking of stocks and shares ISA this time for maybe half of it, but I naively thought I could just have it in my bank account for a bit while I research this but it seems this is not allowed and I would have to pay tax? So I need to know exactly what I want to do before it ends. Also, what happens to the extra? Can I put that in my normal account as it takes me above the £20k? I have Googled and looked on my provider's page and come away more confused so any advice would be great.

OP posts:
cantbearsed27 · 22/12/2025 09:41

Nourishinghandcream · 22/12/2025 09:39

With the recent drop in interest rates, I expect ISA rates will be coming down as well.☹️

Being of advancing years, my OH and I have multiple cash ISA's (amongst other things).
We both had one mature a few weeks ago (5.25%) and transferred them straight across to new cash ISA's paying 4.2%.
My OH was also getting disenchanted with PB's so withdrew £40k and opened a cash ISA in each of our names (also 4.2% which is better than his PB winnings over the past 6-months).

Yes I would transfer it straight into another ISA tbh OP as i expect rates will be coming down.

zzplee · 22/12/2025 09:43

Why have you only earned £800 in interest if the rate was 1.5%?

1.5% of £20,000 is £300. For 5 years that would be £1,500 (actually a bit more with compounding).

Slothey · 22/12/2025 10:00

It’s still £800 for nothing

I hate to break it to you, but you’ve not made £800 I value, you’ve actually lost quite a lot. Your £20k is worth quite a lot less than it was 5 years ago, thanks to inflation. Fag-packet maths suggests that it’s worth only £16k compared to 2020 prices.

If you’d put it into a Stocks and Shares ISA, let’s say a global equity tracker, you’d have over £35k.

Whether or not people invest is a major factor in how they do financially. You’re a reasonably high earner with a decent nest egg that you don’t need - you’d be mad to let it lose more value rather than invest it.

FerrisWheelsandLilacs · 22/12/2025 10:00

cantbearsed27 · 22/12/2025 09:39

But that's per year and OP has had this in for 5 years so has made very little per year. (I feel your pain OP we have a 5 year account that was put in when rates were very low too).

Anyway it's interest from an ISA and that's tax free anyway. Interest from an ISA does not count towards your personal savings allowance either.

OP you don't have to pay any tax whatever way you look at it. If you take it out of the ISA and put it in your normal account then it will stop being an ISA and you will use up your £20,000 allowance for this year if you decide to put it back in an ISA at a later date. That won't matter if you don't want to put any more than £20,000 in this year though. In your normal account I doubt that you'd make enough to have to pay tax on the interest as rates tend to be low and you can make £500 tax free in your bracket.

So your options are : transfer it straight into another ISA - you can transfer the whole amount no matter how much as long as it has come from an ISA account, you can also add up to 20 grand for this years allowance. Or you can put it all in your normal account while you decide what you want to do, you can spend some of it if you want but you probably won't earn enough interest to need to pay tax unless in a savings account - but if you decide to put it back in an ISA then you will only be able to put 20 grand is as that is the limit for the year.

Show quote history

But her annual tax free allowance is irrelevant to the interest she’s earned in the ISA over the past few years?

She has a £500 allowance for interest not in an ISA. It’s not helpful for PP to tell her she has a £1,000 allowance that’s both incorrect and irrelevant without being corrected…

Nesbi · 22/12/2025 10:03

If you have an emergency fund and dont need to access the money for at least 5 years it is generally far better to look at investing it rather than saving.

Whilst investing always carries some risk, so does saving - it carries the risk of inflation eroding the value of your money over time.

£20,000 in 2020 is equivalent to about £25,600 today, so earning anything less than £5,600 over the 5 years means you now have less than you started with.

By contrast, if you’d put the £20,000 into something like a low cost FTSE100 tracking (accumulation) fund it would be worth about £38,500 today.

Nesbi · 22/12/2025 10:05

@Slothey - you got in before me!

MammaTo · 22/12/2025 10:21

In the future it might be best to allow the fixed ISA to mature so it keeps its ISA status while you decide. When I worked in a high street bank a fixed account would mature into an easy access account that you could roll over into another fixed or transfer out.
You can then approach another ISA provider and do an ISA transfer so it all stays tax free.

LemograssLollipop · 22/12/2025 10:30

Keep the money in an ISA unless you need to spend it. The tax advantages ( ie it is tax exempt for income tax and capital tax) are worth it especially as you are Higher rate tax payer. If you choose an easy access ISA to move it into check how many withdrawals you can make - this will allow you to access some of the money for the treats you mentioned.
Do not move the matured ISA funds into your own bank account or you will lose the accrued tax advantages.

rainbowunicorn · 22/12/2025 10:48

OP, if you dont need the money for the next 5 years then don't put it in a cash ISA. As others have said the actual value is eroding due to inflation. You would be better putting it in a S&S ISA where you will actually get a decent return over the long term.

Lifestooshort71 · 22/12/2025 11:06

Slothey · 22/12/2025 10:00

It’s still £800 for nothing

I hate to break it to you, but you’ve not made £800 I value, you’ve actually lost quite a lot. Your £20k is worth quite a lot less than it was 5 years ago, thanks to inflation. Fag-packet maths suggests that it’s worth only £16k compared to 2020 prices.

If you’d put it into a Stocks and Shares ISA, let’s say a global equity tracker, you’d have over £35k.

Whether or not people invest is a major factor in how they do financially. You’re a reasonably high earner with a decent nest egg that you don’t need - you’d be mad to let it lose more value rather than invest it.

Sounds good in theory but over the covid pandemic some S&S ISAs actually lost value. I would never give anyone on here advice as to where to invest - explain the process maybe but so much info on this thread is incorrect.

FerrisWheelsandLilacs · 22/12/2025 11:28

Slothey · 22/12/2025 10:00

It’s still £800 for nothing

I hate to break it to you, but you’ve not made £800 I value, you’ve actually lost quite a lot. Your £20k is worth quite a lot less than it was 5 years ago, thanks to inflation. Fag-packet maths suggests that it’s worth only £16k compared to 2020 prices.

If you’d put it into a Stocks and Shares ISA, let’s say a global equity tracker, you’d have over £35k.

Whether or not people invest is a major factor in how they do financially. You’re a reasonably high earner with a decent nest egg that you don’t need - you’d be mad to let it lose more value rather than invest it.

Tbf, we know very little of the OP’s circumstances. Because of my job there are restrictions on what I’m allowed to invest in. The £20k in DH’s cash ISA has way outperformed the £20k we put into my permissible S&S ISA a couple of years ago, so while generally investing for the long term is the better answer, it’s not always right for everyone’s circumstances.

Elektra1 · 22/12/2025 11:53

You transfer your ISA straight into another ISA, preserving the tax free wrapper. If you withdraw it fist then you will pay tax.

BorgQueen · 22/12/2025 12:09

Open another ISA, Hargreaves Lansdown currently have a Cash ISA with Shawbrook paying 4.05% ( it went down after the latest rate cut) then you request a transfer from your current one.

BorgQueen · 22/12/2025 12:12

Where does tax come into it? It’s a fucking ISA fgs!
No interest from ISAs is EVER taxable.

The only thing is that if you withdrew the completely TAX FREE balance, you could only then put £20k into a new one.

Original poster
Liesmorelies · 22/12/2025 14:06

I'm well aware it's lost money in real terms but it doesn't feel it in the way it would if I had spent £5k on crap, or lost it on the stock market, even though I know that's illogical really. My dc had stocks and shares ISAs recommended by the government when they got the child trust fund things and they are both worth around £12k even though I have barely added to them (haven't been able to afford until recently). For that reason I am very tempted by the S&S ISAs., though I know they're not risk-free, but what I liked about the child ones are you didn't have to do anything! I don't think one like that exists for adults and I have no clue, as this thread reveals. I don't think I have the head space for it.

OP posts:
eurochick · 22/12/2025 14:09

There are lots of S&S ISAs that don’t require you to do anything. My bank offers three options for low, medium and high risk appetites. Other than adding to mine once a year I don’t do anything to it.

Inthewrongtimezone · 22/12/2025 14:19

zzplee · 22/12/2025 09:43

Why have you only earned £800 in interest if the rate was 1.5%?

1.5% of £20,000 is £300. For 5 years that would be £1,500 (actually a bit more with compounding).

I suspect it might have been a variable interest rate, which had been reduced every year.

Spirallingdownwards · 22/12/2025 14:21

Liesmorelies · 22/12/2025 08:53

Thank you - but I can't transfer the full amount can I?

Will I have to pay tax? I earn approx £70k so is there tax to pay? I thought that the point of an ISA was not to pay tax but only if you keep it in an ISA forever? I'm so confusded!

Yes any amount in an ISA can be transferred to another. It does not count as this year's contribution in. It stays tax free

Original poster
Liesmorelies · 22/12/2025 14:25

So I've double-checked and it was fixed rate but 1.10%, not 1.5. The interest is just short of £900. Hopefully that's right!

OP posts:
Lifestooshort71 · 22/12/2025 15:49

Your current provider will send you your options before the ISA matures. If you can't decide what to do, they will move the total amount into a low-interest ISA (thus keeping it in an 'ISA wrapper'). Some ISAs pay monthly interest (at a lower rate though) but worth looking at if you need the cash. Once you've decided where to move it to, follow the instructions from your initial provider - at this stage you can add up to £20k to the balance (this amount will alter from April 27). There is a lot of info online about ISAs from reputable financial institutions - I found it helped me decide and plan for the future when I started. As long as the money in your ISA always stays in an ISA, you will never pay tax on it or the interest (even if you take it monthly) but do some research.

Nourishinghandcream · 22/12/2025 16:04

Thank you - but I can't transfer the full amount can I?

Yes because the £20k limit only applies to new deposits, not maturing transfers.
With our newly matured cash ISA's we transferred £25k each into our new ones.

Superscientist · 22/12/2025 16:40

It doesn't help you now but one of the benefits of a fixed ISA over other fixed savings accounts is you can close them and get your money out. Your forfeit the interest but when the rates started to go up like they did it probably would have been better to close the account take the hit on that interest and move it to somewhere paying 4-5% for fixed ISAs or into other investments.

NotDonna · 28/12/2025 14:51

Liesmorelies · 22/12/2025 09:05

Thank you so much all!

So fortunately I don't anticipate needing the money in the short term and in hindsight having in that account for 5 years wasn't great, but it's still £800 for nothing, so...

One last stupid question: In my head I've always thought I'll reinvest but maybe take out the interest so spend. I don't need to do that, it was more about treating myself and the dc. But now it seems I can't do that or I'll have to pay tax on it. Is that right? Because of child benefit I do self-assessment, so would it be something I'd have to declare next year or would it need paying before then?

The interest you’ve earned in this ISA is tax free. You don’t need mention it as it’s not taxable.
Who is the isa with atm? It’s highly likely that when it natures it’ll stay there - probably not earning much but you can contact them and see if they have another higher interest cash isa or a S&S ISA. OR you can open an account on another platform and then transfer the isa in from that new platform. Do not withdraw it all & try to out back in. It’s best to use the transfer options. You can transfer the whole £20,800 when you are ready and it’ll keep growing. If you want to add to it you can - up to another £20,000 in cash or S&S. The 12,000 cash limit doesn’t start til April ‘27 and remember that’s new contributions to your existing ISA.

NotDonna · 28/12/2025 14:53

Don’t close the account & take it out unless you wish to spend it all. If you want to keep it either saved or invested then do a transfer from the new account - they’ll do it for you.

Boomer55 · 28/12/2025 16:39

Liesmorelies · 22/12/2025 08:45

Through inheritance I had £20k to invest 5 years ago - more money than I've ever had. Obviously interest rates were pants at the time so it was 1.5% and has now matured (or will next week), giving me approx £20 800. I want to reinvest most of it and thinking of stocks and shares ISA this time for maybe half of it, but I naively thought I could just have it in my bank account for a bit while I research this but it seems this is not allowed and I would have to pay tax? So I need to know exactly what I want to do before it ends. Also, what happens to the extra? Can I put that in my normal account as it takes me above the £20k? I have Googled and looked on my provider's page and come away more confused so any advice would be great.

Invest it into another higher rate ISA.