Question from non taxpayer...

circuit

At the moment I am a non-taxpayer. Would a mini cash ISA offer me any advantages over a 5% savings account? I am a bit confused about the pros and cons!

ManAtHome

Depends on how long you intend being a non-taxpayer...

Actually very little difference on the face of it - you can get similar rates from ISAs and savings, but....

If you are likely to start paying tax in future, any ISA funds will remain tax-free, but the savings will attract at least 20% tax (40% if you become a higher-rate taxpayer).

ps - have a look at the NS&I ISA, currently paying 5.30% and they were pretty quick to raise rates when the BoE increased in August (unlike many others).

save-a-lot

Hi

I suppose an ISA will always offer you tax free interest, you say 'at the moment I am a non-taxpayer' - so I can guess from this that your circumstances in the future may change and you will become a tax payer. In that case the ISA interest will remain tax free, whereas savings in a high interest account will become taxable. NS&I offer a good ISA at 5.3% which is really good.

save-a-lot

looks like we posted similar advice at the same time :beer:

circuit

thanks
that's what i guessed, it's good to have it clear in my head!

i've just noticed that kent reliance's rate is 5.21% and they are apparently an 'ethically neutral' company, so i may go for that if there are no withdrawal penalties.

thanks again!

ManAtHome

save-a-lot wrote:

looks like we posted similar advice at the same time :beer:

I can type faster than you - nyah nyan di nyah nyah.... (won't say "In your face Flanders", wouldn't be polite).