good advice wanted please

chatty123

i have £19000 in a cash isa and have just cashed in my rubbish axa policy which will give me £5000. my current isa is only paying 4.55% so i know i can get a better rate if i transfer to another. what i want advice on is which will be the best for the transfer plus 3000 of the 5000. with the remaining 2000 i would be looking to put this somewhere where i can get the best interest. by the way i am a non taxpayer. thank you

ReportInvestor

Hi chatty123,

5.21% Kent Reliance BS Direct ISA takes transfers in and new money.

Birmingham Midshires Internet 6 account @ 5.2% gives you high interest and flexibility for the remaining £2K.

chatty123

Thank You For The Quick Reply . I Will Certainly Look Into These.

LOST

if you are a non taxpayer - there is no advantage in going for a ISA product - you should be going for the highest possible account you can find - you will receive all tax paid at source, but you can fill the HMRC r85 (IIRC) which means you will receive all income tax free (i.e. no 20% tax deduction at source)

ReportInvestor

It's not quite true to say that there is "no advantage" in an ISA for a non-taxpayer - although it's correct in the short term.

Ther non-taxpayer could become a taxpayer later, and the ISA is a "use it or lose it" type of investment. Once lost or not used, it's gone for ever. And we could even lose ISAs for future savings in 2010, it's up to the politicians.

Hereward

LOST wrote:

if you are a non taxpayer - there is no advantage in going for a ISA product - you should be going for the highest possible account you can find - you will receive all tax paid at source, but you can fill the HMRC r85 (IIRC) which means you will receive all income tax free (i.e. no 20% tax deduction at source)

This is only true if you are a non-tax payer today: if you turn into a tax payer tomorrow then the interest on your savings will suddenly have tax to pay; therefore, even if you do not envisage becoming a tax payer using your ISA allowance makes sense as the allowance is a use-it or lose-it affair. Of course, there is the risk that the government may decided to abolish all tax-free savings and investment vehicles, but using them now means that you won’t have lost much, if anything, in the mean time.

LOST

yes -it is a use or lose investment -

you could perhaps put in a higher interest account now and then move to an ISA before 5th April 2007 so that your money earns more for the period

ReportInvestor

But keep the existing £19K cash ISA money as a (better paying) cash ISA.

A further point re ISAs going forward: even if the OP remains a non-taxpayer, the politicians might put up savings tax.

chatty123

thank you all for the replies. it makes interesting reading. i will probably always be a non taxpayer but i am thinking of staying with the isa but i will transfer from my existing 4.55% to one that can offer me more.