5 April

whistler-alison

Hi - further to Martin's Money Tips email today, it is worth me transferring my £550 I have in other savings accounts into my Halifax ISA until after 5 April (I have anough allowance in my ISA)? Will the gain be worth the hassle? I'm not sure what the gain will be.

Paul_Herring

whistler-alison wrote:

Hi - further to Martin's Money Tips email today, it is worth me transferring my £550 I have in other savings accounts into my Halifax ISA until after 5 April (I have anough allowance in my ISA)? Will the gain be worth the hassle? I'm not sure what the gain will be.

The gain will be ( [ISA rate] - [Current savings rate - tax] ) x ( [duration you leave it in ISA] - [transfer duration {usually couple of days}] ).

You only gain long term if you leave the money in there, and you'll be using the full 3K allowance next tax year.

whistler-alison

Thanks Paul. Will the tax be the rate at which I currently pay income tax?

Joe_Bloggs

You can access the detail of your Halifax ISA online. The branch based ISA is a pile of pants and has staggered rate of 3.65% to 4.2%. The telephone/ online version is 5%. Martin's article says 'use it or lose this years allowance'. If you can spare the money from other savings then you could make up the total tax free cash allowance of £3000. Next tax year (April 6th) you could do this again if you had the funds. The previous £3000 will be earning all of £150 @5% tax free. If you didn't use up your allowance then only what you left in the cash ISA will be earning money tax free.

One alternative is to pay tax on interest bearing savings accounts according to earned income. This is paid at rates of 0%, 20% and 40%. Basic rate tax payers will get (100%-20%) of the interest on the balance in savings accounts. So for £3K expect £120 and higher rate taxpayers £90.
These Mini-Cash ISAs really benefit those who can affort to save £250 a month. They are very inflexible as you lose the maximum allowance by withdrawing funds. Better to do this than take on a high interest loan.

I am no savings expert. I don't even have a £2 coin. If you don't understand how much you can make from savings then this is the perfect site to ask questions and find out.
J_B.

whistler-alison

Thanks for your help. I think I completely missed the point of Martin's Tip. I can only put the money into the ISA temporarily, it then has to go back to it's various "pots" otherwise I will get in a pickle (it is my web savers for holiday, Christmas etc).

Paul_Herring

whistler-alison wrote:

Thanks Paul. Will the tax be the rate at which I currently pay income tax?

No. If your highest marginal tax rate is 22%, then the bank will deduct tax at 20%. If your highest marginal tax rate is 40%, then you will have to pay an extra 20% to the taxman, usually at the end of the year if it's not already included in your tax code.

whistler-alison wrote:

I can only put the money into the ISA temporarily, it then has to go back to it's various "pots" otherwise I will get in a pickle (it is my web savers for holiday, Christmas etc).

From what you're saying, I'd suggest leaving it where it is then.

whistler-alison

will do! thanks for all your help