Non tax payer - ISA worthwhile?

bundly

Sorry if this is an ignorant question, but I am really not very good with money.

I earn so little that I don't pay any tax. I have £20,000 in a savings account at 3.5% that matures in July.

Should I still put £10,680 of that in an ISA, or is there somewhere better to put it?

Thanks

Bundly

ultrawomble

If you want to keep it as cash savings, you'll only be able to put £5340 of that into a cash ISA. If you think you'll ever become a tax-payer, then sheltering as much within a tax-free wrapper makes sense.

Paul_Herring

Non tax payer - ISA worthwhile?

Possibly, if you may become a tax payer sometime in the future; less so if you're likely to remain a non-tax payer.

bundly

There is no possibility of me getting any employment. (My small income comes from some self employment type work that I have failed to increase in 12yrs.)

Mikeyorks

Then you may be better looking at the Lloyds TSB Vantage account? You can get 4% for balances between £5k to £7k. And you can have 3 x accounts. It's basically a current account therefore it's instant access. If you can file an R85 (on each account) then you get the full 4% if your tax situation allows.

The mild downside is you have to put £1k monthly into each account to get that rate. Once the accounts are set up - you simply move £1k from A to B to C and then back to A. That satisfies the funding and takes 5 mins / month doing it online.

bundly

Wow Mike that is pretty clever of you to have worked all that out. What happens if one forgets to move the money?

I have a Nationwide Flexaccount, e-savings and several thousands on various 1, 2 and 3 year bonds with them. At 4% I suppose it would be worth my changing everything over to the account you cite?

Mikeyorks

bundly wrote: »

What happens if one forgets to move the money?

You simply don't get the interest that month. So - you don't forget! A diary - particularly an electronic one such as Outlook is pretty useful.

The 4% is variable ..... but it's been that rate for close to 2 years now. So hopefully it will stay around.

Personally I wouldn't quite move the entirety. A bit of mix and match? But I would move most of it in order to make best use of the 3 x accounts (you may need to go into Branch to open the 2nd / 3rd. Take a copy of the relevant bit of the T&Cs as some of their staff don't know!)

Customers are limited to a total of 3 Vantage Accounts

........ from near the bottom of this page :-

http://www.lloydstsb.com/current_accounts/vantage.asp

luvpump

Mikeyorks wrote: »

Then you may be better looking at the Lloyds TSB Vantage account? You can get 4% for balances between £5k to £7k. And you can have 3 x accounts. It's basically a current account therefore it's instant access. If you can file an R85 (on each account) then you get the full 4% if your tax situation allows.

The mild downside is you have to put £1k monthly into each account to get that rate. Once the accounts are set up - you simply move £1k from A to B to C and then back to A. That satisfies the funding and takes 5 mins / month doing it online.

Clever mate ! :T Just opened a vantage account

jennifernil

bundly wrote: »

Wow Mike that is pretty clever of you to have worked all that out. What happens if one forgets to move the money?

I have a Nationwide Flexaccount, e-savings and several thousands on various 1, 2 and 3 year bonds with them. At 4% I suppose it would be worth my changing everything over to the account you cite?

We have the Vantage accounts too, 3 each with £7k in each, we have set up standing orders to move the £1000 around as Mike describes.

Let Lloyds do the work for you!

I prefer SOs as we travel abroad quite a bit and do not always have internet access.

It all moves from A to B to C to A on the same day, so always £7k in each account (unless we use any!)

Each month we move our interest out, as there is no point in leaving it there. We use it either to top up the current account or move it to my next best paying savings account.

We do also have ISAs.

bundly

Standing orders --- sheer genius!

jennifernil

You could also consider "investing" £1000 in opening a Halifax Reward Current account. This gives you £5 each month as long as you pay in a total of £1000 in the calendar month, you can move it straight back out again afterwards.

As a non-taxpayer, you can reclaim £1.25 tax on each £5 at the end of the tax year by submitting an R40 to HMRC. So your £1000 will earn £75 in "interest". Unfortunately you can only have 1 account these days, or 1 sole and 1 joint.