Cash ISA or 123?

albert100

hi guys,


I am a HR taxpayer


I have approx. £17k in a cash isa paying 1.5%


With these new Budget announcements etc., would I do better switching it all into 123 paying 3%?


cheers,


Albert

Vortigern

3% after higher rate tax is 1.8% net, so you'd be better off in the 123 current account regardless of the budget proposals.

LeafGreen

also remember the new personal savings allowance is not effective until 6 April 2016.

Rafter

Also depends on your future savings plans.

By switching to 123 you will permanently lose your 2014/2015 ISA allowance, although you get a new £15k allowance on 5 April.

Ultimately you have to decide whether the £26 extra interest is worth it. (0.3% x £17k less £2/m 123 fees).

The 123 3% interest rate is variable too, so could be reduced at any time.

If you don't need easy access to your savings in 2015, you might be better off getting a fixed rate ISA - you can always get to your money in an emergency in return for an interest penalty.

Good luck

R.

kidmugsy

albert100 wrote: »

I am a HR taxpayer

Then why not contribute to a pension and get 40% tax relief while it is still available?

jimjames

When do you need the money?

It may be worth keeping at least some of it in the ISA wrapper but transfer to a S&S ISA if you don't have one.

albert100

OK - thanks all - food for thought - yes the 3% 123 thing won't stay forever unless BRs start going up soon, which doesn't look like happening anytime soon...


I have a 123 account anyway so the £2 cost is baked in (more than covered by cashbacks etc.)

KonkyWonky

If you are a 1|2|3 World or Santander Select customer you could open a 2 year fixed rate ISA @ 2% which accepts transfers in?

http://www.santander.co.uk/uk/isas/2-year-fixed-rate-isa

edinburgher

The 123 3% interest rate is variable too, so could be reduced at any time.

I have been a customer with this rate for 3+ years now, I don't see why they would suddenly pull it as it has probably improved their share of the current account market no end.