quick question ISA V 12.5% saver....

james3333

hi,
i recently opened a barclays reg saver at 12.5%!
i have £350 per month to save.
should i plough £250 into this 12.5% reg saver and £100 into my cash ISA.
or the other way around?
WHICH WILL GIVE THE BEST RETURN AFTER TAX?
cheers.

Madiba_2

You are better off putting the most you can in the account that pays the most. Unless your cash ISA pays over 10% (ish) then putting as much as poss in your reggy saver will be a better option. However, I would start now, so you can move the £3k into your ISA for 2008.

lizzyb1812

12.5% interest after basic rate tax is 9.75%. If you pay higher rate tax 12.5% after 40% tax is 7.5%. Compare these to the interest rate on your cash ISA

lizzyb

james3333

well my ISA IS 5.25% WITH THE HALIFAX. i pay regular tax.
so, i would be better off paying £250 into the 12.5% reg saver?
and the £100 into ISA
correct ?

aleph_0

james3333 wrote:

hi,
i recently opened a barclays reg saver at 12.5%!
i have £350 per month to save.
should i plough £250 into this 12.5% reg saver and £100 into my cash ISA.
or the other way around?
WHICH WILL GIVE THE BEST RETURN AFTER TAX?
cheers.

The Barclays regular saver will give you more after tax *this year*, but remember that the regular saver only runs for a year, after which time you will be earning less interest on the money (you will probably earn about the same as the ISA after tax if you use the drip feed method in later years described in the article on the main site).

With this in mind you should be trying to get as much money as possible into your ISA each year. So for the last few months of this tax year, I personally would put as much into the ISA as I could up to the £3k limit keeping within the Regular Saver Terms and Conditions (the money in the ISA will be tax free for years ). But this is up to you and realistically may not be worth the effort.

From April, I would certainly go for £250 in the Regular Saver, since the regular saver will finish next January, and so you can get the higher interest on the Regular Saver, then fill your ISA up to the £3,000 limit with some cash from the Regular Saver once it has finished.

Madiba_2

Yes, over 12 months you would be. But when your reggy saver matures, put £1800 of it into your ISA to make the most of your tax free allowance.

james3333

i see what you mean.
the 'use it or loose it' does have an impact, i need to get 3k in there for every year.... where as the reg saver will run out in 12 months.:money:
so this time next year i will have £3,000 in reg saver... i thne need to get as much as i can from that to top up my ISA to the £3,000 allowed.
thanks for that!