ISA vs. Normal Savings

Mewtwo

Suppose you don't pay tax.

In that case, ISA and normal savings are the same, right? In fact, you're likely to be able to find a better rate in non-ISA based savings, correct?

But - savings are taxed automatically, as in, the interest you receive is minus the tax. But if you earn less than the allowed amount (around £7k in my day, I don't know what it is now).

I don't neccessarily work much every year (it's an on-off thing) so some years I might just not have an income above the threshold. So I'd be better with non ISA BUT how can I get them to pay non-taxed?

I could just do the 8% thing and get actually 8% instead of 6.4

CLAPTON

if your total income (earned plus interest ) is less than 8105 then you can fill in R85 form and get the interest paid gross.

psychic_teabag

Mewtwo wrote: »

Suppose you don't pay tax.

In that case, ISA and normal savings are the same, right? In fact, you're likely to be able to find a better rate in non-ISA based savings, correct?

Not always. Around March/April, ISAs tend to pay more than the non-ISA equivalent. Looks like that's still the case for instant-access at the moment, but not by much, and the best ISAs have higher minimum opening balances.

Looks like fixed-term are about on a par now, but last time I posted a comparison, ISAs were ahead on all durations.

atush

Also something to think about is- if you aren't a taxpayer now, will you be in future?

Say you get a new job that pays enough that you pay tax. If you had put your money into an ISA beforehand, you still have that year's ISA allocation locked in (forever or until you spend it) and can put new savings into a new ISA for the current year. So you will have more tax free income in future than you would have had.

gadgetmind

Mewtwo wrote: »

Suppose you don't pay tax.

:beer:

Nuff said.