Real ISA benefit?

angusl

I keep getting told to use mini-ISAs for short term saving though I can't see the benefit. If I understand ISAs correctly then, if I take the money out of any ISA while I am paying tax then the interest that ISA accured will be taxed at a level matching my income tax. Therefore my money would be as well to be in an equivalent interest paying account as an ISA if I plan to withdraw the money while still earning. IF I plan to leave the money there until I retire then the ISA tax benefit is more worthwhile.

Can anyone tell me if this is correct or if I am misunderstanding anything please?! Sorry if this question is a common one but I couldn't find it being asked explicitly anywhere on the forum!

Thanks

bagsacash

The only real benifits to a isa is that its tax free, on interest and CGT.

Now were in the new tax year, if you can get a better deal with an ordinary savings account you would be better off doing that. Nearer the end of the tax year you can still open your isa and bung in you cash so you don't lose this years subscription.

RayWolfe

Your understanding is entirely incorrect. Do you honestly think everyone with a Cash ISA is wasting their time?
Any interest you earn in a Cash ISA is tax free, whether you keep it in the ISA or take it out.
Take a look at one of the articles on this site (look above) to find out exactly how they work.

dunstonh

I keep getting told to use mini-ISAs for short term saving though I can't see the benefit.

If you keep getting told that then you should change where you get your advice from. MINI ISAs havent existed for over a year now.

If I understand ISAs correctly then, if I take the money out of any ISA while I am paying tax then the interest that ISA accured will be taxed at a level matching my income tax.

That is not correct.

Ray has answered correctly.

bagsacash

Any interest you earn in a Cash ISA is tax free, whether you keep it in the ISA or take it out.

How is an isa tax free if you take it out?

RayWolfe

Oh, come on!
Do you really need words of one syllable?
When you take the money out, any interest eared so far is tax free to the point of withdrawal.
Let's hope you were trying to be witty.

bagsacash

Not trying to be witty, but making things clear, a big difference.

angusl

Ray / Dunstonh - thanks guys, that clears things up.

I didn't think that people were misguided (I suspected that I was in the minority!) but wasn't sure about the short term benefits, you've clarified the situation there.

Regarding the Mini-ISA comment, that's probably me just digging old terminology out of some slow-updating part of my brain! However you may be right about my advisor as he's failed to clarify such a simple point to me to date...

Thanks again.

Any

bagsacash wrote: »

Not trying to be witty, but making things clear, a big difference.

Making things clear? Can you clarify this for me?????:rolleyes:

bagsacash

Making things clear? Can you clarify this for me?????

Yes, making things clear is to clarify - hows that?:rotfl:

Any

bagsacash wrote: »

Making things clear? Can you clarify this for me?????

Yes, making things clear is to clarify - hows that?:rotfl:

Ha ha ha, obviously you are a bit bored..
Otherwise I cannot imagine why you are wasting a valuable space on your silly witty comments rather then on actual advice to people who come here for that reason..