Non tax payer should I keep my ISA

hardpressed

Having reached the grand old age of 65 I have been told by HMRC that I no longer have to pay tax, I have £698 of tax free allowance left. As I have £9000 in ISA's at very low interest would I be better putting the money in an ordinary savings account?

DragonQ

Can't see why not, if the normal savings account has a higher rate of interest than the best ISAs. Of course, if in the future ISA interest rates are higher than that of normal savings accounts, you can't just change your mind since you'll be bound by the annual ISA allowance limits.

Cygnus_Alpha

hardpressed wrote: »

Having reached the grand old age of 65 I have been told by HMRC that I no longer have to pay tax, I have £698 of tax free allowance left. As I have £9000 in ISA's at very low interest would I be better putting the money in an ordinary savings account?

Depends how low the ISA rate is compared with the ordinary savings account. Your £698 of tax free allowance left would soon be eaten away in future years as your pension increases and your allowance stays the same (they are phasing out the old age allowance).

kidmugsy

Why not transfer your ISA cash to a better paying ISA account? Or even withdraw £5760, open a new ISA with it at the best interest rate you can find, and transfer the rest into the best paying ISA account that accepts transfers in?

typistretired

Cash ISAs are offering better rates than ordinary savings accounts at the moment. As previously advised just look for the best isa rates as shown on this board and arrange for your new provider to transfer your previous isas. Now you are retired you want as much savings interest as possible.

innovate

An ISA also saves you having to fill in R85 forms. Banks don't know you are not a tax payer and will withhold 20% from any interest, bar ISAs of course.

Having said this, you can get 5% and 3% current accounts quite easily, and 6% or 4% Reg Savers. That is way more than you can get in any cash ISA these days. So may be shifting your money about into the best paying accounts, and filling in the R85 is worth your while.

As and if cash ISA rates beat the current accounts/Reg Savers again, you can dump over half of your savings back into an ISA immediately, and the rest a year later. I reckon you'd make more interest that way than keeping the money in an ISA for now, even if you transferred to a much better rate. It does involve managing your money properly, and moving it as and if it becomes necessary.

bigfreddiel

hardpressed wrote: »

Having reached the grand old age of 65 I have been told by HMRC that I no longer have to pay tax, I have £698 of tax free allowance left. As I have £9000 in ISA's at very low interest would I be better putting the money in an ordinary savings account?

everyone pays tax if they're liable - being 65 does not mean you wil never pay tax

if your income exceeds the tax free allowance it will be taxed at 20%

are you sure your pension(s) (including state pension), interest, casual work will never exceed the tfa - currently £9,440?

if it does you will pay tax at 20%

keep your isa - transfer it to a higher paying account -if anything it makes doing a tax return easier

fj