advice needed

fi816

Hi this is my first time posting so I apologise if I don't get it quite right.

I have a few years ISA lying in the Yorkshire (£15,000) and would like to transfer it as the interest rate is poor. My question is would I be better taking it out and putting it in a savings account if i can get a better rate as I am a non tax payer anyway.

Thank you in advance fi x

masonic

Are you likely to become a taxpayer in the future? If so, it might be worth accepting slightly lower returns in the short term so that you can benefit in the future. If not, historically, the best standard savings accounts seemed to have slightly higher rates than the corresponding ISAs, so you'll probably do a bit better outside of the ISA even after the present situation of low interest rates is over.

fairtrade

It depends on the rate you can get and if you need access to the money.
You can get up to 5% in a fixed rate ISA account, you can get 4.6% with the Leeds BS ISA with a one-off 25% withdrawal. You could also get the NS&I savings certificate RPI+1% fixed for 3 or 5 years.

MacsReturns

Hi and welcome.

On one hand, if you don't pay tax then the ISA isn't giving you anything extra, so as you say, a higher rate outside the ISA would give a better return.

On the other hand, if you did happen to become a taxpayer again (your circumstances might change, or tax theshholds might change...) you could end up worse off after the interest is taxed. You may then find an ISA at a better overall rate and you would only be able to move £5200 per year back into it.

Maybe wait a week or two as a certain event may affect tax &/or interest rates... meanwhile I think the safest/most prudent/boring thing to do may well be to just look for a better ISA.

Consumerist

If you will definitely not pay tax in the current tax year then you can move to a standard (taxable) savings account and complete an HMRC tax form R85 to have your interest paid gross (i.e. tax free).

If you might be paying tax in the future then you may be better off with the ISA to maintain the tax-free status of your current savings in future years.