IF ISA Offsetting Question

Dave79_2

Hi,

Does anyone know the weighting that IF apply to an ISA when offsetting a £10k loan?

For example, if I have £8k in Savings and 3K in an ISA and choose to offset will I have to pay tax on the interest earned or will the interest go to the ISA?

Conversely if I choose not to offset and have 8k in savings and 3k in an ISA, I then earn 9.9% on all my savings up to £10k, and 5% on anything over. Now would I then get interest at 9.9% on £3k of the ISA, £7k of the savings and 5% on the remaining £1k, or would I get 9.9% on the £8k of savings, £2k of ISA and 5% on the other £1k of the ISA.

I know it will be cheaper in the short term to offset fully, but if I can stash as much as possible into my ISA (ie interest at 9.9% instead of 5%) the more I will have to play with in future.

Hopefully that made sense to someone...