Quick question - ISA or not, for non-tax payer?

LMac

Other than not paying tax on an ISA, is there any other reasons to choose an ISA over another account? The money is for a mortgage deposit, so short - medium term savings.

Im looking at the Citibank Flexible Saver (3.3% for one year) to move funds from a v poor smile isa.

Hope someone can help. Have to nip out for school run shortly, but will be back soon.

KingL

Not really. You can get better rates in non ISA savings if you don't pay tax anyway.

LMac

Thanks - wasnt sure if there was a catch somewhere!

The_Enforcer

Two options for you to look at for short-term savings are one of the regular savers where you are tied in to making small regular payments each month for a year - I think Norwich and Peterborough is the leader here at 5%, which is a good rate for a non-tax payer.

The other option if you have a lump sum of £2,500 knocking around is the Alliance & Leicester Premier Direct Current Account, which pays 6% fixed for a year on balances up to £2,500, thereby operating like a 1 year fixed rate, whilst retaining easy access. The main condition, is that you must pay/transfer in £500 every month, although this can be from any source and transferred out again if balance is over £2,500 (only 1% paid above that figure). Again, an exceptionally good rate for a non-tax payer.

barak

LMac wrote: »

.....Im looking at the Citibank Flexible Saver (3.3% for one year).....

Don't be mislead into thinking that the rate of 3.30% AER is fixed - it's the Bonus of 2.25% that is fixed for 12 months. It might not happen, but if the underlying rate of 1.00% fell to (say)0.25%, the overall rate would also fall by 0.75%.

ING have an account that is fixed - at 3.20% for 12 months.

The_Enforcer

LMac wrote: »

Im looking at the Citibank Flexible Saver (3.3% for one year) to move funds from a v poor smile isa.

Bear in mind that it's only the bonus that's fixed on that one, the underlying rate of 1.05% is variable and could fall.

zygurat789

If you're saving for a mortgage deposit and are not paying tax now then the chances are you may be before you take out the mortgage. Also you have to persuade the deposit taker to pay you gross or you have to reclaim the tax deducted on the interest from HMRC. Are you confident you could remember to do and do these things?
The ISA is simpler and hassle free, admittedly it may not be paying the best rate at the moment but with interest rates things rarely remain constant for long.