taking out from regular saving or isa

wheelz
wheelz Posts: 334 Forumite
First Anniversary Combo Breaker
in Savings & investments
I have a 5% flexclusive regular savings account (nationwide) and 2 isas (one old one new). I need to pay a sum of over £10,000 and don't know whether using up all my regular savings account money (3,500) so far or continue with that in order to get the interest in April and use my isa savings. Next year I am expecting to sell my flat (after April probably). That money will have to go in bank accounts as I'm not buying another property at the moment. I am aware that once you take money out of an isa it's gone, you cannot replace it. What would you do?
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Comments

  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    What's your tax rate? What rate are the ISAs paying? Would you transfer some of the ISA money to a different type of ISA after you've sold your house?
    There are few reasons to use a cash ISA now, with Base-rate payers getting up to £1000 interest at zero% tax.
    You'll be able to put £20,000 in an ISA next year, if you want.
    I'd keep the 5% savers going, and spend from the ISA, unless the ISA is paying 4% or more.
    Eco Miser
    Saving money for well over half a century
  • mt99
    mt99 Posts: 472 Forumite
    Actually, you can replace the money from the ISA provided your provider allows it - so if they do then you can take the money from ISA, and if you can put it back by 4 April you will keep the allowance (even if you then take it out again a day later).
  • wheelz
    wheelz Posts: 334 Forumite
    First Anniversary Combo Breaker
    Eco_Miser wrote: »
    What's your tax rate? What rate are the ISAs paying? Would you transfer some of the ISA money to a different type of ISA after you've sold your house?
    There are few reasons to use a cash ISA now, with Base-rate payers getting up to £1000 interest at zero% tax.
    You'll be able to put £20,000 in an ISA next year, if you want.
    I'd keep the 5% savers going, and spend from the ISA, unless the ISA is paying 4% or more.

    I'm in the lower tax rate (earn less than 40,000). ISA rate is 1.75%. I am more thinking, once it's gone it's gone. I've build it up over the years. I will of course pay quite a bit of tax (I think) when I have sold the flat and this is also what I was thinking of. My first reaction was also to keep the regular saver.
  • wheelz
    wheelz Posts: 334 Forumite
    First Anniversary Combo Breaker
    mt99 wrote: »
    Actually, you can replace the money from the ISA provided your provider allows it - so if they do then you can take the money from ISA, and if you can put it back by 4 April you will keep the allowance (even if you then take it out again a day later).

    I don't think I will have sold and completed by April.
  • jimjames
    jimjames Posts: 17,596 Forumite
    Photogenic Name Dropper First Anniversary First Post
    wheelz wrote: »
    I'm in the lower tax rate (earn less than 40,000). ISA rate is 1.75%. I am more thinking, once it's gone it's gone. I've build it up over the years. I will of course pay quite a bit of tax (I think) when I have sold the flat and this is also what I was thinking of. My first reaction was also to keep the regular saver.

    If it's £10k then it's not a case of if it's gone, it's gone. You can pay in £20k per year
    Remember the saying: if it looks too good to be true it almost certainly is.
  • wheelz
    wheelz Posts: 334 Forumite
    First Anniversary Combo Breaker
    I don't have a spare 20k to pay in, so if I've taken it out I cannot replace it, only some of it.
  • chucknorris
    chucknorris Posts: 10,786 Forumite
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    wheelz wrote: »
    ISA rate is 1.75%..

    Put it in a SS ISA, for example the ftse 100 is currently yielding over 4% (plus potential capital growth). The ftse 100 isn't ideal, but is is easy to outperform 1.75% with other more diverse indices.
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
  • wheelz
    wheelz Posts: 334 Forumite
    First Anniversary Combo Breaker
    I already have an isa and just saw that the rate is actually 0.75% must have gone down. I also have an older isa with a better rate. What I need to decide is whether to give up some of my isa money as I won't be able to pay it all back before the end of the tax year as my income isn't high enough for that. Then next year when I sell my house I will then have to pay tax (via tax return) as my tax will be over £1000. So I'm thinking that in the long run it is better to keep my isa and give up my 3500 already paid into a regular saver for which i get 5% interest and doesn't run out until may/june next year. But I'm not sure and it somehow doesn't feel right to take that money out.
  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    wheelz wrote: »
    Then next year when I sell my house I will then have to pay tax (via tax return) as my tax will be over £1000.
    You mean your interest, from the proceeds of your house put into savings accounts, will be over £1000?
    wheelz wrote: »
    So I'm thinking that in the long run it is better to keep my isa and give up my 3500 already paid into a regular saver for which i get 5% interest and doesn't run out until may/june next year. But I'm not sure and it somehow doesn't feel right to take that money out.
    Calculate how much taxable interest you will get in each financial year, remembering that you will put £20,000 into an ISA each year, both in the scenario where you take this money from the 5% account, and from the 1.75%ISA.

    Actually, we're only talking about the £3500 in the RS (and possibly the further £2500 you could add to it).
    The rest is gone from your ISA anyway.
    Eco Miser
    Saving money for well over half a century
  • wheelz
    wheelz Posts: 334 Forumite
    First Anniversary Combo Breaker
    I've decided to take it all from the ISA and fill the isa just before it runs out with the two non-isa savings accounts I have. I still have no idea how much tax is actually paid on interest that is over the allowed interest (on a tax return). That way I won't lose too much interest of the normal savings accounts as the interest will still be paid as interest is calculated on a daily basis.
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