ISA advice for complete newbie

pickledtink

As I've never really had any money to save and just kept anything for bills, tax etc in an online easy access account I'm only just trying to make some sensible choices re ISAs.
My Self employed business has just pretty much gone under. I have a frugal amount to live on for about a year or so whilst I retrain and try to get into something else. I'd like to put some into an ISA. Having pored over this board and others am I right that this year twice the 5640.00 is allowed and if so can it be split between a cash ISA and the other half into Edinburgh investment trust via Hargreave and Lansdowne ISA? However I have just read some conflicting info which suggests it can only be 11280.00 if it's in stocks and shares. I don't want to do that.
I did buy and sell some stocks and shares in a small way many years ago but as a single parent money has always had to be accessible and I always put anything I could into paying off the mortgage so am now virtually mortgage free.
Any advice gratefully received and thanks for your patience but I can't afford to screw this up.

Scarpacci

£11,280 is the maximum allowed in either a Stocks and Shares ISA or combined in a Cash ISA and a Stocks and Shares ISA per tax year. £5,640 is the maximum allowed in a Cash ISA each year, provided you put no more than £5,640 in a S&S ISA. So you have a total limit of £11,280 which can either be split evenly between cash and S&S or allocated fully to S&S.

I may have misread but it sounds like this money is for you to live on for a year, so are you sure you want to be putting this money away in ISAs right now? I would be especially concerned about investing, which is generally only advisable for the long-term, if you will be needing the money soon. Markets are volatile now so you could easily lose quite a bit of money in the short-term. If you think you will be withdrawing any of this money in the next twelve months, which it sounds like you will if you're living on it, then I would keep it in an easy access savings account.

Easy access ISAs aren't paying much more than easy access accounts and if you're not earning enough to pay tax this year, you could have the interest paid gross in a standard savings account.

pickledtink

Thanks for that. I will have some tax payable this year as I have earned over the personal allowance. Although I'm preparing for as long as 18 months before earning again I hope in truth I'll be making some income again before that which would mean at least one chunk of 5640.00 could be left as savings for at least one year if not more
Any advice therefore on which easy access savings account would be best for money I'll need to withdraw to live on during the next year?

xylophone

http://www.moneysupermarket.com/savings/
http://www.hmrc.gov.uk/rates/it.htm
http://www.hmrc.gov.uk/tdsi/ten-per-cent-guidance.htm

Scarpacci

pickledtink wrote: »

Thanks for that. I will have some tax payable this year as I have earned over the personal allowance. Although I'm preparing for as long as 18 months before earning again I hope in truth I'll be making some income again before that which would mean at least one chunk of 5640.00 could be left as savings for at least one year if not more
Any advice therefore on which easy access savings account would be best for money I'll need to withdraw to live on during the next year?

I think Santander are currently the market-leader with an instant access account paying 3.2% (includes 1 year bonus, no limits on withdrawals). Personally, I have never had any problems with my dealings with them (admittedly limited to savings), but I know they do have a bad reputation around here.

ING Direct are another company I can recommend and they have an easy access at 3.19%. They are ultimately regulated by the Dutch government and savers' money is guaranteed by the Dutch government - not the British, which may be a concern for some people.

There are a few other accounts listed on this MSE page:
http://www.moneysavingexpert.com/savings/savings-accounts-best-interest