Isa or regular saver
eric4395
Posts: 113 Forumite
Apologies i know it has probably been done on here numerous times but my wife and i have isas totaling about £50,000 maturing in August..We are willing to invest it for another 2 years. However 1.37% is best rate for a 2 year isa or 1. 95% for 5 years at the moment with just over 2 % as the best fixed rate should we take it out and put it in there. Isas used to be a no brainer but not anymore it seems. With us both in our 60' s now dont really want to take the chance with stocks and shares isas. So what is the viewpoint on here what would you do. Thanks for any replies and advice.
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Do you have other savings, or interest-bearing accounts?
Now that you can each have £1000 of interest free of tax, there may not be any point having an ISA. You would need to jump through a few hoops to earn decent interest, but many people do.0 -
Yes we do have other fixed rate savings accounts but no idea if we have reached the £1000 limit?0
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Yes we do have other fixed rate savings accounts but no idea if we have reached the £1000 limit?
Your fixed rate savings interest only applies when they mature and comes out of that tax year's personal savings allowance - the £1k figure.
So for argument's sake let's say you have two accounts - one account that matures on April 1st and will generate £500 of interest and a second account that matures on April 10th. These are in two different tax years and so the one that matures on April 1st comes out of the 2017/18 year and the other comes out of the 2018/19 year. You'd pay no interest tax on either.
And in any case it doesn't matter as such if you go over the limit because you don't pay it directly yourself, your tax code is adjusted at the new tax year and just like National Insurance it'll come out of your pay so you won't directly notice it, though how this works for older workers and pensions I can't be sure.
To answer the original question - you can have both, the ISA you 'll be able to get the money out again save for an interest penalty whereas the fixed rate you won't, the ISA is tax-free so the £1k allowance is irrelevant and you can have as many regular savers as you want subject to the T&Cs of them such as the ones linked to having certain current accounts and any limits set by the providers - such as Virgin's "one issue per customer" for example.
Note that most regular savers such as the Virgin ones will only generate on average about £40 a year per issue as you only get the interest on money in the account and you can only pay a limited amount in per month. But if you hoover these up as they arrive, they're one of the better places and for the most part they're easy access.0 -
Neil_Jones wrote: »Your fixed rate savings interest only applies when they mature and comes out of that tax year's personal savings allowance - the £1k figure.
So for argument's sake let's say you have two accounts - one account that matures on April 1st and will generate £500 of interest and a second account that matures on April 10th. These are in two different tax years and so the one that matures on April 1st comes out of the 2017/18 year and the other comes out of the 2018/19 year. You'd pay no interest tax on either.
And in any case it doesn't matter as such if you go over the limit because you don't pay it directly yourself, your tax code is adjusted at the new tax year and just like National Insurance it'll come out of your pay so you won't directly notice it, though how this works for older workers and pensions I can't be sure.
To answer the original question - you can have both, the ISA you 'll be able to get the money out again save for an interest penalty whereas the fixed rate you won't, the ISA is tax-free so the £1k allowance is irrelevant and you can have as many regular savers as you want subject to the T&Cs of them such as the ones linked to having certain current accounts and any limits set by the providers - such as Virgin's "one issue per customer" for example.
Note that most regular savers such as the Virgin ones will only generate on average about £40 a year per issue as you only get the interest on money in the account and you can only pay a limited amount in per month. But if you hoover these up as they arrive, they're one of the better places and for the most part they're easy access.
Apologies i have said regular saver in title when should have said fixed rate saver.So my choice is to continue with an isa at 1.37% over 2 years or take it out and put it in a fixed rate account at just over2% . I have other savings in fixed rate accounts as well so i am not sure if the £1k tax limit would kick in0 -
You'll need to clarify what your other savings and rates are as it could make quite a difference, even more so if you're a higher rate tax payer.Apologies i have said regular saver in title when should have said fixed rate saver.So my choice is to continue with an isa at 1.37% over 2 years or take it out and put it in a fixed rate account at just over2% . I have other savings in fixed rate accounts as well so i am not sure if the £1k tax limit would kick in
A fixed rate non-ISA account at 2% would indeed return that gross figure if all of the interest was contained within your PSA but if all the PSA was already spoken for by your other non-ISA savings then the new account is only going to return 1.6% (if you're a basic rate taxpayer) or 1.2% if you're at the higher rate, so you need to consider all of your savings in aggregate to ascertain the best way forward....
This is a rather odd comment that OP would do well to ignore - the tax payable is the same regardless of whether it may be collected by adjusting PAYE codes in some cases, so OP (and anyone else) should focus primarily on how much is payable rather than how it's actually collected.Neil_Jones wrote: »And in any case it doesn't matter as such if you go over the limit because you don't pay it directly yourself, your tax code is adjusted at the new tax year and just like National Insurance it'll come out of your pay so you won't directly notice it, though how this works for older workers and pensions I can't be sure.0 -
With us both in our 60' s now dont really want to take the chance with stocks and shares isas. So what is the viewpoint on here what would you do. Thanks for any replies and advice.
Why do you think being in your 60's means you shouldn't think about investing in S&S ISAs?
Assuming you both have 'normal' life expectancy, you could be looking at another 25 - 30 years:). If you keep all your savings in cash over that length of time, the value will be substantially reduced, in terms of purchasing power, over that time.
It doesn't have to be 'all or nothing'. You could consider transferring your existing cash ISAs into S&S ISAs when they mature, and keep the rest of your cash in some of the high interest current accounts and regular savers.0 -
I was going to post the same as badger09, there is nothing that says all your money has to be in the same thing and you could even use a small proportion of your money to invest in S&S ISA if you are very risk averse.
Is your pension still invested or do you have annuity/final salary?Remember the saying: if it looks too good to be true it almost certainly is.0
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