Join the waitlist for ISAs with Monzo


#102

Carrying on with the example above. The interest earned on the money during the 360 or so days it is outside the ISA is taxable. But because of the amount involved and current interest rates, any interest earned will be well below my PSA so there will be no tax to pay.

By long-term ISA status I mean I do not have to re-subscribe the money to put it back into the same flexible ISA within the same tax year. In other words paying the money back in does not count as new ISA money and does not make use of my allowance for that year. If I did not pay the money back in during the same tax year it will lose this status. If I wanted to pay it back in a future tax year I would have to use part of my ISA subscription allowance in that year.


(Jordan) #103

So you don’t gain any tangible benefit from doing that, but you are essentially making it work so that if your ISA ever had an incredible % rate - you could dump your £20k plus your £10k movement money into it without having any problems?


#104

If you mean benefit relative to just keeping it constantly in a non-ISA savings account, then no I don’t gain any current benefit. But I’m not losing out in a significant way either.

Yes. If cash ISA interest rates went above non-ISA cash interest rates in the future I could move the £10k back into my cash ISA without using any of my subscription allowance for the year in which that happened.

But cash ISA interest rates going above non-ISA cash interest rates is not the only scenario in which I might want to do this. The other scenario would be the removal or lowering of the personal savings allowance or me moving into a higher tax bracket.


#105

Yes. If cash ISA interest rates went above non-ISA cash interest rates in the future I could move the £10k into an ISA without using any of my subscription allowance for the year in which that happened.

I am not qualified to offer tax advice but I think this would reduce your allowance.


#106

Not if following the process I have described above (money moved out and back in a flexible ISA within same tax year).


(Jordan) #107

okay gotcha, I was trying to work out the benefits and just got stumped :rofl::rofl:


(Stefano) #109

Interesting! How is ISA interest calculated on this constantly moving around £10K?


#110

Simple example. Let’s say the £10k is in Marcus for 360 days and in a 1% ISA for 5 days.

  • Marcus interest will be something like £10k x 0.015 x 360/365 = £148. This is taxable but below PSA so no tax to pay.
  • ISA interest will be something like £10k x 0.01 x 5/365 = £1.37

I would actually earn more than this in interest as I would use a collection of higher interest accounts than Marcus. But the example keeps things simple.


( related to Monzo CEO, Investor in Monzo ) #111

…and…you get to keep your ISA tax free allowance for that year rather than losing the benefit allowance because you haven’t used it that year , which as you say if ISA interest rates alter could be advantageous or you can invest in later years in a Stocks and shares ISA up to that amount for a tax free CGT benefit, and in later years if you become a higher rate taxpayer even better - you do need it to be a flexible ISA initially as you’ve already said for this to work


(Jordan) #112

Looks like you’ve cracked it for ISAs and the like but I guess this only really works or is advantageous if you have a little war chest ready to capitalise on the possible PSA decrease or ISA interest rate increase (i dont see interest rates going up) so would be in the PSA part.

I’ve got everything sealed up in ISAs or Bonds atm so this strategy wouldnt help me as yet, but i can see why it could!


#113

I assume here you mean some form of investment ISA like Stocks and Shares.

The only thing I would say here is I personally think building up and maintaining an easy access cash savings balance (large enough to cover bills and other regular expenses for a few months in the event of unexpected unemployment) should be prioritized before tying up money in investments.


(Splodf) #114

Rainy Day fund. 3 months at first, 6 months long term goal. There’s even an umbrella in the baked in Monzo images!


(Jordan) #115

Yes I have a S&S LISA for my house deposit and now have a S&S ISA with the Dozens Bonds (which will effectively work as my “rainy day”).

I’ve got some money which I have which just sits in a Current Account which is kinda like my emergency fund.

Although my recent deposit for my next flat wiped that clean.

I’m only just starting to build up my portfolio of savings having just graduated university.


#116

Anyone seen Coventry BS in the financial news? Just added a new offer that Monzo should be doing.

1.5% Flexible online Easy Access

https://www.coventrybuildingsociety.co.uk/consumer/product/savings/cash_isa/easy-access-isa-online.html


#117

Might be worth mentioning there are also several others pretty close to 1.5%


https://moneyfacts.co.uk/isa/variable-rate-isa/


#118

All signed up but are there any ideas on timings or possible rates and if this will happen for 2018-19 as other institutions have deadlines earlier than end of the month to open 2018-19 ISAS ? and for some offers may need to make a decision as early as next week !


(Graham - Mental health professional) #119

Yep, Buckinghamshire BS appear to be bucking the trend - I’ll get my car keys…:smirk:


#120

Is this just for the 2018 - 2019 years allowance or can you join the waiting list for the next tax year 2019 - 2020


(Sacha Zarb) #121

See I would happily take 1% and a easier life with Monzo (one log in one view) then the marginally better rate with Marcus, (or ING Direct 2.0 as I think of it), also makes money moving simple.

I don’t really have the time between work, school pick ups and activities to manage loads of accounts.

Would also be super interested in a stocks and shares option, Moneybox is great, but again, one place for all


(Matt Jones) #122

How about Monzo collaborating with Moneybox or similar for S&S ISA like you did with Investec?