Mini Cash ISA... or just savings account?

(Land_of)_Maz

I have opened a mini cash ISA yesterday, HBOS 5.75%

Too late now but was wondering if i should have just bunged it into a savings account. I don't expect i'll reach the £3000 maximum payin (as if!!! Aiming for £1000 and that's optimistic!)

I'm not in a high tax bracket or anything....

Think i got kinda seduced by the notion of saving something and went for the option which ties into my internet banking. The fact that i can see it mounting up will be motivation, i hope.

jem16

Basic rate taxpayers lose 20% to tax and higher rate taxpayers lose 40%.

So yes tax-free savings are the way to go unless you like giving the taxman money.

saveaholic68

I agree, you've done the right thing.
You lose so much of your interest in tax if you put into a standard savings account - why let the taxman have it, when you can stick it in an ISA and keep it for yourself?

(Land_of)_Maz

I didn't realise i'd have to pay tax on it if it weren't in an ISA.

Ooooh i feel all clever and smug now! Thanks for replies jem and saveaholic (nice username!)

Maz

Broke_Student

Maz3374 wrote: »

I didn't realise i'd have to pay tax on it if it weren't in an ISA.
Maz

Im curious - what did you think was unique about an ISA then?

System

The benefit of the ISA is that it has what Martin Lewis calls a tax free wrapper and it can stay that way after you graduate.

However if you are working but not making full use of your tax free allowance of £5225 then you would be able to claim back any tax deducted from interest gained on any ordinary savings account anyway and some of them are paying higher rates of Gross interest than the ISA's.

(Land_of)_Maz

Broke_Student wrote: »

Im curious - what did you think was unique about an ISA then?

I just didn't think someone who earned an average wage would even pay tax on savings at all! I thought it was only stinking rich people who earned loads in the first place who were taxed further.... but then i've never had savings so i've never needed to know anything about them.

Will watch my little ISA grow, get some sense of satisfaction out of it!