Confused about ISA - benefit of paying in at the end of the tax year?Savings account?

AliceBrownie

Is there any benefit to paying money in up to my full allowance now, less than a week before the new tax year, or would it really just be so that I can transfer it into a new ISA next year rather than paying it in?
Also, would there be any benefit to opening a high interest savings account (which, tbh, I think I'd end up with the same interest at the end) and then pay it into an ISA before the end of the next tax year, or would I be better off making payments into my ISA throughout the year? So confused!

Archi_Bald

A good reason for depositing before April 6 is that you will make use of your 2013-14 allowance (£11,520 in total, of which £5,760 can be cash ISA). You have lost that allowance forever if you do not use it before April 6 2014. Of course, if the maximum you want to pay into a cash ISA is £15K, it doesn't matter since you will get that allowance next year.

Any benefit to opening a high interest savings account and then pay it into an ISA before the end of the next tax year - - - yes, this is a perfectly good theory.

Except there aren't really any high interest paying savings accounts, with the exception of some regular savers. But Regular Savers are only good if you don't want to make use of a lumpsum - - in which case, yes, the best one (FD, 6% AER) would beat any cash ISA rate, even for a higher rate rate tax payer. Even the 4% ones would be better for basic rate tax payers. You would need quite a few regular savers to accommodate your full 2-14-15 allowance since they all have monthly maximum amounts.

All is not lost, though if you have a lumpsum (or several throughout the year) - there are some high interest paying current accounts that will beat ISAs. Again, you might need several to accommodate your full allowance - £4K TSB 5%, £2.5K FlexDirect 5%, £5K Club Lloyds 4%, rest into Santander 123 3%, ignoring their £2/mth charge). Or bung it all into a 123 since they pay 3% on £3K - £20K. Most of these rates are variable so you need to keep an eye on them. Also, all accounts come with pre-reqs - see the provider's website and lots of threads on MSE.