Is there any point in ISAs now?

pandora205

Following on from the budget announcement of tax free savings (up to max of £1000 interest) - is this just a sweetener that is likely to be whipped away in the future?

Archi_Bald

pandora205 wrote: »

Following on from the budget announcement of tax free savings (up to max of £1000 interest) - is this just a sweetener that is likely to be whipped away in the future?

The £1,000 tax free doesn't come into force until April 2016, and may never do so if the 2 Eds get in.

I presume you are talking about a cash ISA. Whether it will be worth it depends on the amount of money, and when you expect to need the money.

MARTYM8`

If you are a higher rate taxpayer with lots of savings - most definitely. Basic rate and not many - maybe not but its still tax free.

Maybe interest rates will rise one day - the tax wrapper is indefinite and you can always move the funds to an S&S isa.

And Governments can change - so that April 2016 reform is not guaranteed or may be watered down to avoid welfare cuts.

pandora205

Just found an interesting article on the topic on the Moneywise site: http://www.moneywise.co.uk/news/2015-03-25/budget-changes-mean-bad-news-savers

jimjames

MARTYM8` wrote: »

If you are a higher rate taxpayer with lots of savings - most definitely. Basic rate and not many - maybe not but its still tax free.

Maybe interest rates will rise one day - the tax wrapper is indefinite and you can always move the funds to an S&S isa.

I still don't understand the attraction or benefit of a cash ISA for someone with average savings of up to £2000.

If you can get 5% with TSB outside an ISA or 1% inside an ISA why would you choose the lower amount? It's true that rates change and the TSB could drop but that's equally true for ISAs and you need to move your money every year to track the better rates.

planteria

Archi_Bald wrote: »

The £1,000 tax free doesn't come into force until April 2016, and may never do so if the 2 Eds get in.

an interesting point.

and i agree with jim, in that small amounts don't benefit from being in an ISA, and unless you are going use your ISA allowance to build up a substantial sum, then you can just use the current year's allowance whenever you want to.

but for those looking to build up a substantial sum, doing so within an ISA still makes sense, as it is then wrapped away from future taxes. long-term, better in Stocks & Shares than Cash though.