MSE News: ISAs become bigger tax-free NISAs today – so what's changed?

Former_MSE_Helen

ISAs transform into NISAs today, meaning everyone can now save £15,000 tax-free in cash or shares savings...

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ISAs become bigger tax-free NISAs today – so what's changed?




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Pincher

"I have £15,000 leftover every year, and I have nowhere to put it."

A common problem we all share, I'm sure.

minislim

ISA's have turned into NISA's.

so whats changed?

nowt!

the current interest rates for ISA's has stagnated and no bank is willing to compete for peoples business any more.

Martin always advocated that we chase the higher rates once the existing rate drops and move. but all the banks seem to be stuck at 1.5%.

im ready to move my ISA to another bank. but my current old rate is the same as all their competitors new rates.

so im staying put until somebody makes the first move.

i suspect im going to be waiting a while.

Zanderman

Pincher wrote: »

"I have £15,000 leftover every year, and I have nowhere to put it."

A common problem we all share, I'm sure.

Indeed!

And the biggest issue is glossed over in the official article - namely that ISA interest rates are utterly rubbish. Meaning that for people with small amounts of savings (a few hundred or maybe a few thousand) the various interest paying current accounts are a much better bet, even though they're not tax-free, and your money is instantly accessible!

ISAs only work if you can put significant (to most people) sums aside every year and leave them untouched. But even so they have rubbish rates and your cash might still do better elsewhere (with some effort on your part).

The other useful point for many (also missing from the article) arising from the 15K limit is that people can now move money from old ISAs into better ones that don't accept a transfer in - as you can just withdraw up to 15K from old one(s) and put it back in as 'new' ISA money (assuming you don't have or expect to have a new 15K spare each year).

Pincher

Obviously George Osborne will have to raise the ISA limit to £20k in 2015, so we can withdraw the £15k we built-up this year, add £5k that we manage to scrimp together over the year, to open a new ISA with a better rate in 2015.


Darn it, curses the banks who think they have us trapped.

jimjames

Yet again an mse article hyping up ISAs with no mention of other options that are way better for someone with average savings.

Why get 1.5% or less tax free when you can get 5% taxed. It really seems like not paying tax is more important to mse than getting the best return on your money.

Very disappointed....

BLB53

so whats changed?

Well, now you can get cr*p returns on even more of your money!

colsten

jimjames wrote: »

Very disappointed....

To be fair, the article does mention in passing " although some top paying current accounts (where you need to switch bank accounts) do pay such high rates that in the short term, they beat ISA returns"

Although it isn't correct to say that you have to switch bank accounts.

Zanderman

jimjames wrote: »

Yet again an mse article hyping up ISAs with no mention of other options that are way better for someone with average savings.

Why get 1.5% or less tax free when you can get 5% taxed. It really seems like not paying tax is more important to mse than getting the best return on your money.

Yes, it's odd isn't it! And the financial pages of all the newspapers do the same too.

Save in an ISA (I can't call them NISAs as they're not actually nicer) and you get tiny interest, and the exchequer gets no tax. Despite you and the exchequer both being short of money. Only the bank wins.

Save in a higher interest current account and you get a better interest rate (even after tax) and the exchequer gets some tax. So you and the exchequer are better off. Only the bank loses.

It seems the financial media are obsessed with saving tax - even when it's counter-productive for the public and the country - but good for the bank.

Archi_Bald

If everyone cordoned on to the current account game, the interest rates on those would soon plummet. So we should may be greatful to the journalists for hammering the NISA message.....

On a related point - I do hope the term NISA doesn't stick. It's just an ISA, like it was before, with slightly higher limits and 1 rule change.

matttye

One benefit I can see to NISAs is that even though the rates are abysmal, they stay tax free year after year. So if, in the future, the rates improve, you'll still have a heap of tax free savings.

Maybe the short term cost is worth the long term gains?

Not sure how likely it is that NISA rates will ever beat current account rates though...