Upgrading an ISA

ViolaLass

morpheus83uk wrote: »

So does that rule apply to stocks and shares ISAs as well? What happens if I gain more interest than £1000? Do I just lose it?

As of the next tax year, any interest you get over £1000 will be taxed in the same way that interest is taxed now e.g. at the moment, depending on your tax code, if you earn £1200 in interest, you may pay tax on it all. Next year, if you earn £1200 in interest, you will not pay tax on the first £1000. You may, depending on your tax code, pay tax on the remaining £200.

This rule doesn't need to apply to cash or S&S ISAs, the interest they earn is already untaxed.

morpheus83uk

Thanks that's what I was confused about I brought it applied to ISAs as well as that is where all my money is saved currently! Phew had me worried a bit there.

ViolaLass

Going back to points earlier in the thread, you could make more interest in non-ISA accounts because some of them now have interest rates so much higher than ISAs than even with tax, they pay more interest.

The Santander current account after 20% tax pays 2.4%, or 1.8% after 40% tax, both of which are higher than the ISA you mentioned.

jimjames

ViolaLass wrote: »

Going back to points earlier in the thread, you could make more interest in non-ISA accounts because some of them now have interest rates so much higher than ISAs than even with tax, they pay more interest.

The Santander current account after 20% tax pays 2.4%, or 1.8% after 40% tax, both of which are higher than the ISA you mentioned.

And Lloyds (4%), TSB and Nationwide (5%) are substantially higher than any ISA after tax.

morpheus83uk

Are those savings accounts or Current Accounts? I have the TSB 5% current account and a Nationwide regular savings account at 1.6% currently.

ViolaLass

Current accounts.

morpheus83uk

Thanks I have the 5% TSB account and a joint 123 account its just the savings I was questioning as ISA's have always been the way forward however not any more by the sounds it it.