To ISA or not to ISA?

toffee87

My partner and I are going to start saving for a house deposit (approx £10,000), we're aiming to save over the next 12 or so months. We both have one, and so I will fill mine and vice versa. However, is it not true that you only gain the interest benefits the following tax year? Would a 'normal' savings account be better?

Thanks

Lokolo

You only get the benefits the following next year because interest is normally paid yearly, so you wouldn't receive interest until next year (unless you closed the account early). However it wouldn't make sense to open a normal savings account as you wouldn't get the interest until next year as well (again, unless you closed it early)

McKneff

If you pay into an Isa, that is it. You get your interest paid at the end of the tax year, leave it there and keep on paying in, the same thing happens at the end of each year.

In a normal savings account, you would be paid your interest less 20% tax so its a no brainer really.

If you are normal tax payers An Isa is the way to go.

Think you are getting a bit mixed up to be honest. It really is just as simple as the above.

toffee87

Ah right, that makes sense! Yep, we are normal tax payers! Thanks.

toffee87

Ah right, that makes sense! Yep, we are normal tax payers! Thanks.

RayWolfe

As you don't seem to want a cash ISA for long term saving go for any account which after tax pays more than an ISA or an ISA that pays more than a non ISA after tax.

donkingkong

toffee87 wrote: »

My partner and I are going to start saving for a house deposit (approx £10,000), we're aiming to save over the next 12 or so months. We both have one, and so I will fill mine and vice versa. However, is it not true that you only gain the interest benefits the following tax year? Would a 'normal' savings account be better?

Thanks

Check out the Santander First Home Saver.

Vixstar

Some ISAs pay interest monthly - you'll have to check the details if you want one that pays monthly.

toffee87

The Santander First Home Saver seems to not favour those who put more than 300 per month, we're looking at 800+! Thanks though!

bigfreddiel

Save into an isa - not only is it tax free (you get to keep 100% as opposed to 80% as a normal tax payer) but if you need to complete a tax return you do not need to declare any ISA savings information - makes life a whole lot simpler.

My wife and I have been saving into cash ISA's for many years - now have £80k at 4.4% - okay not quite beating inflation but better than giveing 20% (£700+) back to HMG!

missile

You need to be careful, there are many instant access ISAs with very poor variable rates.

Santander headline rate for current account holders is 3.2%, including the introductory bonus which terminates after 12 months. LTSB Vantage pays 3.14% after tax. Not a lot in it really.