£8000 over 6 months

unknown_786

Over the next few six months I should earn around £8000 from a new job...I have been looking to open an ISA for some time...but am unsure whether it would be better to open a savings account..out of the £8000 I am hoping to put about £1000 a month into some sort of savings account or isa...Any help would be much appreciated...

Thanking you in advance,

Unknown

libra10

I Would save as much as possible in a cash ISA, this way the tax man can't grab any of the interest.

You should be able to benefit from both this tax year and next tax year's ISA allowance.

Good luck in your decision.

Plasticman

Your ISA will pay you interest tax free so certainly the better option. If you open it now you are able to pay in £3000 before April and another £3000 after. The rest will need to go into a savings account.

unknown_786

I guess the next question is which is the best ISA and which is the best savings account? From my reasearch it appears that Halifax and First Direct are amongst the best out there...anyone have any recommendations?

Plasticman

Take a look here:


http://www.moneysupermarket.com/savings/


Although the First Direct ISA looks good at the moment, it also includes the following:
"The interest rates displayed are fixed and are payable until 15th February 2006. The rate will then revert to 3.93% Gross, 4.00% AER (variable)."

Best at the moment seems to be Alliance & Leicester.

A&L also offer a good savings account, as do ICICI. You need to take a read here:

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1077487692,12362,

and here:

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1098730527,15721,

unknown_786

I am a bit confused..after reading Martins advice and the other threads relating to this it appears the best thing would be to open an ISA, followed by a savings account - However, I am unsure as to the whole "tax-free" idea? I appreciate that I will be taxed on my payslip, but as a STUDENT will I also be taxed on money in a savings account? What exactly does opening an ISA stop one getting taxed on? Apologies if this post seems confused - but it is!!!

Regards,

Unknown

desiman

Just think of a Cash ISA as a savings account. Any interest you make on an ISA, it all yours. Whereas any interest you make on a savings account, the taxman takes a slice.

Students get taxed, just like everyone else. unless you have an ISA of course.

Plus you can only put in 3000 every tax year in a cash isa. no more.

SAP_Saver

silly question I know but can you put £3,000 more in each year so after 5 years have £15,000 in an ISA/5 ISAs ? thus earning 5.??% on the £15,000?

Kazza242

SAP_Saver wrote:

silly question I know but can you put £3,000 more in each year so after 5 years have £15,000 in an ISA/5 ISAs ? thus earning 5.??% on the £15,000?

Yes, you can. From April 6 each year a new tax year begins and with it each person over the age of 16 gets a cash isa allowance of £3,000.

Plasticman

but don't forget that if you take any out you can't put it back in.