Cash ISAs: The Best Currently Available List

kaMelo

Marvel1 said:

pecunianonolet said:

jaceyboy said:

Why are cash isa rates are so low compared to easy access accounts??

Because ISA's are only really worth it if you have to pay tax on your interest. Almost everyone has a personal free allowance of either 500 (higher earner) or 1000 (basic rate tax payer). Top earners don't have any allowance, so the more tax you pay, the more attractive the ISA is.

You can now take the ISA rate and multiply it with the figures below and it shows you what interest rate you would need to earn on the market outside an ISA to achieve a bigger return.

If the ISA rate is 4%, you are a higher rate tax payer and earn more than 500 of interest a year the ISA is worth it unless you find a bank paying you 6.64% in interest.

"How do I compare cash ISA rates to normal savings rates if I pay tax?

If you pay tax on savings interest, it's often not clear whether a higher-paying normal savings account beats a cash ISA for you.

Yet some simple maths can help you compare. Take the rate on the ISA you're looking at and multiply it by:

- 1.25 if you're a basic-rate taxpayer
- 1.66 if you're higher-rate taxpayer
- 1.82 if you're a top-rate taxpayer

The result of that sum is the rate you need to get on normal savings for it to be the winner vs the cash ISA equivalent. If normal savings don't pay more than that, then you're better off in the cash ISA."

https://www.moneysavingexpert.com/savings/best-cash-isa/ (bottom of the page)

I have £25,000 to put away, could be possibly be £28,000 maxmium.

Looking at a 1 year fixed ISA at 4.70%

I am a basic-rate taxpayer = 1.25

4.70 x 1.25 = 5.88

I would need to find a normal savings account at 5.88% minimum to choose a normal savings account over the cash ISA I'm looking at?

Essentially yes but note that you can't put more than £20,000 of new money into an ISA so will have to put any excess into a non ISA, ideally the highest available account that suits your needs.

Bigwheels1111

Marvel1 said:

pecunianonolet said:

jaceyboy said:

Why are cash isa rates are so low compared to easy access accounts??

Because ISA's are only really worth it if you have to pay tax on your interest. Almost everyone has a personal free allowance of either 500 (higher earner) or 1000 (basic rate tax payer). Top earners don't have any allowance, so the more tax you pay, the more attractive the ISA is.

You can now take the ISA rate and multiply it with the figures below and it shows you what interest rate you would need to earn on the market outside an ISA to achieve a bigger return.

If the ISA rate is 4%, you are a higher rate tax payer and earn more than 500 of interest a year the ISA is worth it unless you find a bank paying you 6.64% in interest.

"How do I compare cash ISA rates to normal savings rates if I pay tax?

If you pay tax on savings interest, it's often not clear whether a higher-paying normal savings account beats a cash ISA for you.

Yet some simple maths can help you compare. Take the rate on the ISA you're looking at and multiply it by:

- 1.25 if you're a basic-rate taxpayer
- 1.66 if you're higher-rate taxpayer
- 1.82 if you're a top-rate taxpayer

The result of that sum is the rate you need to get on normal savings for it to be the winner vs the cash ISA equivalent. If normal savings don't pay more than that, then you're better off in the cash ISA."

https://www.moneysavingexpert.com/savings/best-cash-isa/ (bottom of the page)

I have £25,000 to put away, could be possibly be £28,000 maxmium.

Looking at a 1 year fixed ISA at 4.70%

I am a basic-rate taxpayer = 1.25

4.70 x 1.25 = 5.88

I would need to find a normal savings account at 5.88% minimum to choose a normal savings account over the cash ISA I'm looking at?

Oak North 4.81% 90 penalty of interest to close 1 year.
Virgin Money 5% 3 years, 120 interest penalty.

2010

Charter 4.8% 1 yr fix ISA £5K min, 30 days to fund.

someone

pookey said:

Marvel1 said:

I have £25,000 to put away, could be possibly be £28,000 maxmium.

Looking at a 1 year fixed ISA at 4.70%

I am a basic-rate taxpayer = 1.25

4.70 x 1.25 = 5.88

I would need to find a normal savings account at 5.88% minimum to choose a normal savings account over the cash ISA I'm looking at?

Yes but also be aware that if you did find an account with this rate and put 25k into it you would need to pay tax on the interest over £1,000 so it would be better to put some of it in an ISA as its tax free savings 

Err, the 1.25 multiplier is accounting for the tax situation. If anything if you have no other source of interest then the 5.88% taxable account will win over the ISA as the PSA will apply to the first £1k.

ISA
£25,000 * 0.047 = £1,175
Total = £1,175

Standard taxable account (with 100% PSA)
£25,000 * 0.0588 = £1,470
less tax due over PSA as basic rate
£470 * 0.2 = -£94
Total = £1,376

Standard taxable account (with no PSA)

£25,000 * 0.0588 = £1,470

less tax due

£1,470 * 0.2 = -£294

Total = £1,176

However with rates increasing the PSA will slowly become less relevant. If you have a £25k lump sum then I guess you are likely over the 1 year fix generate some more savings. By using the ISA you can also deploy your PSA on "better accounts". For example regular savers that tend to have higher promo rate for limited amounts of money.

pookey

someone said:

pookey said:

Marvel1 said:

I have £25,000 to put away, could be possibly be £28,000 maxmium.

Looking at a 1 year fixed ISA at 4.70%

I am a basic-rate taxpayer = 1.25

4.70 x 1.25 = 5.88

I would need to find a normal savings account at 5.88% minimum to choose a normal savings account over the cash ISA I'm looking at?

Yes but also be aware that if you did find an account with this rate and put 25k into it you would need to pay tax on the interest over £1,000 so it would be better to put some of it in an ISA as its tax free savings 

Err, the 1.25 multiplier is accounting for the tax situation. If anything if you have no other source of interest then the 5.88% taxable account will win over the ISA as the PSA will apply to the first £1k.

ISA
£25,000 * 0.047 = £1,175
Total = £1,175

Standard taxable account (with 100% PSA)
£25,000 * 0.0588 = £1,470
less tax due over PSA as basic rate
£470 * 0.2 = -£94
Total = £1,376

Standard taxable account (with no PSA)

£25,000 * 0.0588 = £1,470

less tax due

£1,470 * 0.2 = -£294

Total = £1,176

However with rates increasing the PSA will slowly become less relevant. If you have a £25k lump sum then I guess you are likely over the 1 year fix generate some more savings. By using the ISA you can also deploy your PSA on "better accounts". For example regular savers that tend to have higher promo rate for limited amounts of money.

Sorry, I completely missed this. Thank you for clarifying 😊

bristolleedsfan

Lloyds Bank 5% 1 year fix -  Lloyds Bank personal current account that has been opened for a minimum of 40 days.

Lloyds Bank 5.05% 2 year fix - Lloyds Bank personal current account that has been opened for a minimum of 40 days.

https://www.lloydsbank.com/savings.html

refluxer

bristolleedsfan said:

Lloyds Bank 5% 1 year fix -  Lloyds Bank personal current account that has been opened for a minimum of 40 days.

Lloyds Bank 5.05% 2 year fix - Lloyds Bank personal current account that has been opened for a minimum of 40 days.

https://www.lloydsbank.com/savings.html

It's worth mentioning that you can also apply for the ISAs even if you don't have a Lloyds current account - you just get a slightly reduced rate of 4.95% and 5.00% respectively.

bristolleedsfan

Oaknorth - 1 Year fix  - 4.96%

Furness BS 2 year fix  5.10%  -

Rate applies from

26/06/2023

Furness  BS 3 year fix 5.15%

Rate applies from 26/06/2023

rallycurve

Cynergy easy access ISA 3.85%

dlevene

As more people get pushed into tax on savings interest by the higher rates, I wonder if the ISA market will get a bit more competitive. 

I'm in that (fortunate - no pun intended) position and the difference with the easy access market is striking. Going to wait a week and see if there's any more movement...