Cash ISAs: The Best Currently Available List

dlevene

pookey said:

dlevene said:

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...

I hope it doesn't go the other way and less competitive as we are having to rely on ISA's 😅

Can't know for sure I suppose, but generally I think if the market is bigger it'll get more competitive? I'm remembering the early days of ISAs, before the PSA and with a higher base rate, and the market was extremely busy. 

dlevene

All that said, what really takes the Michael is that the PSA thresholds haven't increased since first introduced in 2016...

pookey

dlevene said:

pookey said:

dlevene said:

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...

I hope it doesn't go the other way and less competitive as we are having to rely on ISA's 😅

Can't know for sure I suppose, but generally I think if the market is bigger it'll get more competitive? I'm remembering the early days of ISAs, before the PSA and with a higher base rate, and the market was extremely busy. 

I'm hoping it will be OK too but you never know. The interest rates have been so terrible before 2022 I haven't bothered with ISA's for a very long time

pookey

dlevene said:

All that said, what really takes the Michael is that the PSA thresholds haven't increased since first introduced in 2016...

That's true but then I guess that's what the ISA's are there for

someone

dlevene said:

All that said, what really takes the Michael is that the PSA thresholds haven't increased since first introduced in 2016...

Hasn't increased but at the same time hasn't decreased.

Capital Gains Tax (CGT) annual exempt amount has been reducing quite a bit £12,300 -> £6,000 -> £3,000 !

Dividend Allowance has also been reducing  £2,000  -> £1,000 -> £500

Frankly the personal allowance needs increasing (cost of living, working age people needing more support) and the easiest way to part pay for that is to abolish the PSA. It's a relatively new concept, is far less generous in high rate environments, and more a quirk in the personal tax system. Unlike abolishing ISAs it would be unlikely to cause much of a public mutiny.

isasmurf

someone said:

dlevene said:

All that said, what really takes the Michael is that the PSA thresholds haven't increased since first introduced in 2016...

Hasn't increased but at the same time hasn't decreased.

Capital Gains Tax (CGT) annual exempt amount has been reducing quite a bit £12,300 -> £6,000 -> £3,000 !

Dividend Allowance has also been reducing  £2,000  -> £1,000 -> £500

Frankly the personal allowance needs increasing (cost of living, working age people needing more support) and the easiest way to part pay for that is to abolish the PSA. It's a relatively new concept, is far less generous in high rate environments, and more a quirk in the personal tax system. Unlike abolishing ISAs it would be unlikely to cause much of a public mutiny.

The PSA won't be abolished. It was introduced as a consequence of abolishing tax deduction at source for savings interest. The government of the day wanted to abolish TDSI as many pensioners and low income people that were non-taxpayers didn't reclaim tax deducted or complete the form not to have tax deducted, and they wanted to stop those that did reclaim from having to interact with the tax system.

Consequently, that meant many more people having underpayments of tax from savings interest that needed collecting. To remove most of these people, and especially those with a nominal tax underpayment that was going to cost more to collect than was due, the PSA was introduced. Therefore, there is always going to be a small PSA to exclude those with small savings from having tax code adjustments. The question for policy makers is where on the scale between removing those where collecting tax would not be cost effective to removing the majority of PAYE only taxpayers from requiring tax code adjustments do they want to set the PSA at. 

From a policy and tax simplification perspective, cash ISAs should be abolished with the cost being redirected to increase the PSA. This would give the exchequer far greater certainty over cost than ISAs ever can, and removes the taxpayer's confusion with ISAs that still persists 24 years after their introduction. In the low interest environment ISAs still cost the public purse billions every year, I shudder to think what they are costing today.

From a political perspective, as you allude that just isn't going to happen. Especially when a general election is imminent. 

Ocelot

I'd only accept the abolition of ISAs if all savings income was tax free. It must cost a lot to administer it.

bristolleedsfan

isasmurf said:

someone said:

dlevene said:

All that said, what really takes the Michael is that the PSA thresholds haven't increased since first introduced in 2016...

Hasn't increased but at the same time hasn't decreased.

Capital Gains Tax (CGT) annual exempt amount has been reducing quite a bit £12,300 -> £6,000 -> £3,000 !

Dividend Allowance has also been reducing  £2,000  -> £1,000 -> £500

Frankly the personal allowance needs increasing (cost of living, working age people needing more support) and the easiest way to part pay for that is to abolish the PSA. It's a relatively new concept, is far less generous in high rate environments, and more a quirk in the personal tax system. Unlike abolishing ISAs it would be unlikely to cause much of a public mutiny.

The PSA won't be abolished. It was introduced as a consequence of abolishing tax deduction at source for savings interest. The government of the day wanted to abolish TDSI as many pensioners and low income people that were non-taxpayers didn't reclaim tax deducted or complete the form not to have tax deducted, and they wanted to stop those that did reclaim from having to interact with the tax system.

I would have thought with somewhat likely incoming labour government in not to distant future  all bets are off as to what personal savings tax free benefits may or may not be abolished/reduced in the future.

dlevene

I've unintentionally kicked off quite an interesting debate!

Perhaps scaling back rather than abolishing ISAs, eg. reducing the total allowance, and using the reduced costs to government to increase the personal allowance, would be a politically acceptable way of retaining the administrative benefits of the PSA while targeting lower earners?

Rich2808

I see Lloyds have just launched a one and two year fixed rate isa paying 4.95 per cent which rises to 5 per cent for current account holders.

I have read the terms and conditions but it’s not clear how long you have to pay into the isa. Many providers allow up to 28 days or longer to make payments or transfers in - the terms don’t specify anything on this. Or is your opening investment your only permitted payment into the account?

Any thoughts for anyone who has opened this or another Lloyds fixed rate isa?

https://www.lloydsbank.com/isas/1-year-fixed-rate-cash-isa.html