Cash ISAs: The Best Currently Available List

AlwaysLearnin

Sounds like her position could be similar to Dereks in the case studies:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293747/Fact_sheet_template_-_10__tax_9.pdf

(it refers to a £10500 personal allowance, but that has been increased to £10600 since)

boobbby

AlwaysLearnin wrote: »

Sounds like her position could be similar to Dereks in the case studies:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293747/Fact_sheet_template_-_10__tax_9.pdf

(it refers to a £10500 personal allowance, but that has been increased to £10600 since)

Well done finding that which clearly explains it is better to use a higher paying savings/current account rather than an ISA if your total income is less than £15600 in the next tax year. This must benefit many pensioners providing they understand you have to apply for it using form R85

masonic

boobbby wrote: »

Well done finding that which clearly explains it is better to use a higher paying savings/current account rather than an ISA if your total income is less than £15600 in the next tax year. This must benefit many pensioners providing they understand you have to apply for it using form R85

Even those earning considerably more than £15,600 can get better rates outside of a cash ISA. 3% after basic rate tax is 2.4% and 5% after basic rate tax is 4%. There aren't any ISAs paying more 2.4% unless you are willing to fix for 4+ years.

gwapenut

colsten wrote: »

They sound grand rates but can be beaten in various other scenarios

• 12 x£1,270 in 3.5% ISA = £287.41 return
• 12 x £800 in 6% non ISA RS, £400 in 4% non ISA RS: £330.61 return after BR tax (£442.60 gross)
• 1 x £15,240 in 2% ISA = £304.80 return
• 1 x £15,240 in 3% non-ISA accounts £365.56 return after BR tax (£457.20 gross)
• 1 x £4,500 in 5% non-ISA, £5,000 in 4% non-ISA, £5,740 in 3% non-ISA: £474.72 return after BR tax (£593.40 gross)
• etc etc etc

Worth for people to work out what is best for them, and not just look at AER numbers.

You're right to point out the effective halving of the rate for a RS but I think your figures omit the positive effect of earning non-Isa interest on the unsaved portions of the regular saver accounts before they get put into an isa.

Sant123 feeder into saffron isa is a powerful combination

colsten

OK, can you work out the extra (for all the regular savers, not just the ISAs)?

I would put it to you that drip-feeding still leaves cash ISAs as sub-optimal deals for most people.

gwapenut

Sure. Anyone can get 1.5% easy access which is worth approx 110 extra (using a simplistic slightly inaccurate calculation) before tax.

For a 123 account this doubles to become about 200 extra before tax but after deducting the 123 fee.

For the isa, this beats all but the complicated arrangement of 3, 4, 5 % accounts for non and basic rate tax. For higher rate tax i believe it beats all others.

masonic

gwapenut wrote: »

For the isa, this beats all but the complicated arrangement of 3, 4, 5 % accounts for non and basic rate tax. For higher rate tax i believe it beats all others.

You can save up to £800 per month into non-ISA regular savers paying 6% before tax, which should be used before considering any ISA regular savers paying less than 4.8% (BR taxpayers) or 3.6% (HR taxpayers). If opened after 5th April, there is a good chance that no tax will be payable on the interest owing to the changes announced in the budget, making these an even better deal and allowing a number of 4% regular savers to be utilised as well in preference to these ISA regular savers.

gwapenut

I agree that the non isa 6% regular savers would yield a higher return for basic or higher rate tax payers, if you are sure you will not need the instant penalty free access that the saffron is likely to offer.

I disagree this may be tax free. The budget changes are clearly scheduled for the next but one tax year.

masonic

gwapenut wrote: »

I disagree this may be tax free. The budget changes are clearly scheduled for the next but one tax year.

Interest is paid at maturity, which will be in the 2016/17 tax year if opened after 5th April 2015.

gwapenut

Ah, hadn't realised that. Most of my regular savers have either had interest paid monthly or either in December or at the end of the tax year.

I understand your point though because i do have one rs maturing which will not pay out until next tax year.

Good point to consider.