I’ve just moved to the UK and want to open an Isa, where do I start?

I’m new to the UK and want to consider opening a cash Isa.

I am 59 years old and have some savings that I would like to invest in this type of savings arrangement. I wouldn’t need to draw on this Isa, but I would like to know that two to three withdrawals a year could be made for emergencies if necessary.

I would also like to start an Isa for my daughter and son, both in their 30s. My son does not reside in the UK. it’s possible? Via email

Helen Kirrane from This is Money responds: ISAs offer UK residents the opportunity to save up to £20,000 tax-free each tax year. Some of the best cash ISAs currently offer interest of over 4.8%.

This is more important than ever as interest rates have risen sharply over the past two years.

This means that taxpayers with more basic rates have had to start paying taxes on the interest on their savings with smaller funds.

For more expert advice, we spoke to Anna Bowes, Co-Founder of Savings Champion and James Blower, founder of Savings Guru.

Anna Bowes responds: Welcome to the United Kingdom. Individual savings accounts (ISAs) are a great way to save and invest money in a tax-efficient way, but there are also other deductions you should be aware of that may be available to you and your children, depending on your or their income.

Firstly, you could benefit from the Personal Savings Allowance (PSA) depending on how much tax you pay. Basic rate taxpayers can earn £1,000 a year in savings interest and pay no tax.

Higher rate taxpayers have a PSA of £500, but additional rate taxpayers have no PSA.

Anna Bowes, co-founder of Savings Champion: If you are likely to use up your PSA and are not eligible for the introductory savings rate, cash Isas are a useful additional allowance.

There is also the initial Savings rate, which is an allowance of up to £5,000 of cash savings interest on which you may not have to pay tax, if your ‘other’ income (such as wages or pensions) is less than £ . 17,570 a year.

If you are likely to fully use up your PSA and are not eligible for the initial Savings rate, then a cash Isa could be a really useful additional allowance to use, which is currently £20,000 a year.

There are easy-access cash and fixed-term Isas, as well as notice accounts, but one thing to note is that, unlike fixed-term bonds, you can get access to fixed-term Isas in an emergency, although there is likely to be considerable penalty.

So perhaps you could open an easy access Isa with money you might need access to and put some extra money into a fixed rate Isa that you would only access in an emergency.

Recent rule changes mean this is possible, but you should check with each provider as they may not have adopted the new rules.

James Blower, founder of Savings Guru: Isas are a great option to earn interest without paying tax

James Blower responds: You are right to consider Isas as they are a great option to earn interest without paying tax.

Although the PSA allows UK taxpayers to earn £500 (higher rate taxpayers) or £1,000 (basic rate taxpayers) in tax-free interest, with interest rates still high savers need less than £10,000 (higher rate taxpayers). higher) or £20,000 (basic rate) to have to pay tax.

Another advantage of Isas is that rates on easy access Isas are currently higher than those on taxable accounts.

You mention that you would like access for emergencies. This is something that all Isas allow but, in the case of fixed rate Isas, providers may charge a fee for this.

Typically, it will cost 90 days’ interest to access a one-year Isa and a full year’s interest to access a five-year Isa.

With this in mind, if you think you might need access, easy access Isas are likely to be a better option. You should also consider a flexible Isa, which allows you to replenish the money withdrawn without losing your allowance.

Helen Kirrane answers: Many of the best easy-access Isas at the moment are offered by app-based providers, so you’ll need to download an app to open them.

Plum has an easy-access cash Isa, which pays 5.17 per cent interest. But this rate includes a bonus rate of 0.88 for the first 12 months. After this, the rate drops to a variable 4.29 percent, which could rise or fall. The minimum amount needed to open this Isa is £100.

You should note with this account that if your Isa balance falls below £100, or you make more than three withdrawals in a year, the rate drops to 3 per cent.

The only drawback of the Plum account is that it is not flexible.

A Flexible Cash Isa is worth considering because it’s a great tax-beating savings tool.

They let you dip into your pot and, as long as you pay the money back during the same tax year, you don’t lose your tax-free wrapper or use up that year’s £20,000 Isa allowance.

Chip has an easy-access cash Isa that pays 5.1 per cent interest. This Isa does not allow transfers from another Isa, but as you don’t have an existing Isa this shouldn’t be a problem. It has the added benefit of being a flexible Isa. The minimum amount needed to open this Isa is £1.

If you don’t want to download an app to open an Isa, Paragon Bank has an easy-access Isa that pays a rate of 4.95 per cent. The minimum amount needed to open this account is £1000 and it can be opened online on the Paragon Bank website.

Although it’s called “easy access”, you can actually only make two withdrawals every 12 months. You’ll be penalized a rate that drops to just 1.5 percent if you withdraw your money for the third time in 12 months.

Like the Chip Isa, the Paragon Bank Isa has the added benefit of being a flexible Isa.

> See our roundup: Five of the best cash Isas

Opening an Isa for your children

James Blower responds: In terms of supporting your son and daughter, there are a couple of challenges here. They are too old for junior Isas so an account cannot be opened for them.

In the case of your daughter, you could give her the money to open one, but the Isa itself will have to be in her name; you will have no control over what she does with that money.

Regarding your child, this will not be possible as you will need to be resident in the UK to open one. While it is possible to keep an Isa if a saver opens one while living in the UK and then moves abroad, it is not possible to open one if they are non-resident, unless they work for the Crown abroad, for example in the Armed Forces or as a diplomat.

Anna Bowes responds: For your children, your daughter may want to consider a Lifetime Isa if she is looking to buy her first home with the money. I’ll explain it in a moment.

However, your child, if they are not a UK resident, a member of the UK armed forces or a servant of the Crown, will not be able to open an Isa.

Regarding the Lifetime Isa, the benefit of this account is that for every deposit made, up to the maximum allowance of £4,000 per year, the government will add a 25 per cent bonus. So if your daughter deposited £4,000, the account would receive a £1,000 bonus.

However, as you would expect, there are rules that must be followed. You must be between 18 and 39 to open a Lifetime Isa.

If you want to access the money before you turn 60, you must use it to buy your first home, which cannot exceed £450,000.

You would also need to hold the Lifetime Isa for at least 12 months before using it to buy a house.

If it’s not to buy a home, then you’ll have to pay a 25 percent penalty for each “unauthorized withdrawal” until age 60, at which point there is no penalty for withdrawing the cash for any purpose.

While the 25 percent fine seems to indicate that you would simply be paying back the bonus the government gave you, it’s not that simple.

What it actually means is that not only do you get back the entire government bonus, but also 6.25 percent of your personal contribution.

For example, if you put the maximum £4,000 into a Lifetime Isa, the Government will top it up with £1,000.

If you needed to withdraw the full £5,000, you would have to pay a 25 per cent penalty on £5,000, which is £1,250. Therefore, assuming no interest has been accrued, you would receive only £3,750 of your original £4,000 deposit.

All that said, an Isa is a valuable tool for earning tax-free returns on your savings or investments; just make sure you choose the best option.

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