Isas 2016/2017

mrsp1987

Right, so I'm a bit new to all this as I've had an ISA with Natwest for donkeys years and have just been paying small amounts into it. However, now I'm in a position where I can use the full allowance due to a very lovely early inheritance from my husband's dad (what I mean is he gave it to us now rather than when he dies, not that he died early!!).
So, I'm wondering when do the new ISA offers come out? I know there's going to be a big push for people to make use of their maximum allowance before the end of the tax year but I'd like to start comparing new ISAs for the next tax year already. I'm pretty sure I'm getting absolute peanuts from Natwest and really want to make the most out of the lump sum I've got sitting in there.
Many thanks!!

Sam_J12

Congratulations on the windfall!

To answer your first question, the end of this tax year is 5 April, so the 2016/2017 ISA allowance starts from after that date.

If you want to make the most of the sum, then I think the most important thing for you do to is decide what you want to use the money for, and when you want to use it. This will dramatically change what you should do with the money now.

If you don't need the money until you retire, you should strongly consider putting some or all of the money into a pension fund (highly advantageous due to tax reasons) - either directly into your own pension or through additional contributions to an employer pension.

If you don't need the money for a long time (many years) then investing in a stocks and shares ISA may well be the best best. Long term investments in shares mean the short term fluctuations in share prices (like is happening currently) won't matter and you are likely to enjoy long term good growth.

If you need the money soon (i.e. in the next couple of years) then keeping it all in cash is the best idea -either in a cash ISA, or possibly better in bank accounts that pay higher rates of interest.

Or it is quite possible you can do two/three of these things with parts of the money. The important thing is that you decide now what you want the money for. People can then give you much better advice!

Pincher

mrsp1987 wrote: »

I've had an ISA with Natwest for donkeys years and have just been paying small amounts into it.

If you must put it into ISA, be aware that a lot of ISAs don't want old money, only new. So if you put it into an old cash ISA now, the next ISA may not want the transfer in.


They don't want your money.
It's like getting "I'm washing my hair, go away."


You need to go to friskier girls to get more interest, like S&S ISAs.

mrsp1987

Pincher wrote: »

If you must put it into ISA, be aware that a lot of ISAs don't want old money, only new. So if you put it into an old cash ISA now, the next ISA may not want the transfer in.


They don't want your money.
It's like getting "I'm washing my hair, go away."


You need to go to friskier girls to get more interest, like S&S ISAs.

So would I not be able to transfer this amount into a new ISA with a decent interest rate and then pay in my £15k annual allowance for 16/17?

My husband is putting his money into a S&S ISA and I'd rather have mine in a cash ISA so that should we need the money for an emergency its accessable. So, I'm only interested in cash ISAs at the moment.

jimjames

mrsp1987 wrote: »

My husband is putting his money into a S&S ISA and I'd rather have mine in a cash ISA so that should we need the money for an emergency its accessable. So, I'm only interested in cash ISAs at the moment.

Any reason why you only want a cash ISA rather than an account that pays far better interest? It may be more effort but you'll get up to 5% rather than the pitiful amount you get on your current ISA. Or have you got an ISA paying nearer 5% already?

mrsp1987

I'm going for the cash ISA for the tax free benefits I suppose. I'll have nearly £30K in my ISA once I get into the 16/17 tax year so I imagine there would be a significant amount of tax to pay on this. Please correct me if I'm wrong because if I can get closer to 5% than 1.5% I'd go for that in a heartbeat. I just want to make sure I'm not going to pay a lot in tax. Like I said, I've never been in the position of having money

jimjames

mrsp1987 wrote: »

I'm going for the cash ISA for the tax free benefits I suppose. I'll have nearly £30K in my ISA once I get into the 16/17 tax year so I imagine there would be a significant amount of tax to pay on this. Please correct me if I'm wrong because if I can get closer to 5% than 1.5% I'd go for that in a heartbeat. I just want to make sure I'm not going to pay a lot in tax. Like I said, I've never been in the position of having money

Does it really matter if you pay a lot of tax if the rate is better? Surely it's better to pay tax on 5% than get 1.5% tax free? Even as a higher rate taxpayer 5% with tax deducted is more than 1.5% from an ISA. Also bear in mind that as of April you get a £1000 tax free allowance anyway if you're a basic rate taxpayer.


It's more effort to get 5% but not as easy as plonking it all in an ISA.

mrsp1987

I'm definitely not a higher rate taxpayer lol. I do see your point though. Even if I do pay tax on my 5% interest earnings, once that has been deducted I'll still probably be better off than paying no tax on 1.5%. I guess I've always just gone with the whole 'it's tax free savings' idea.
I'll still keep the ISA on the back burner but I think I'll start looking for high interest savings accounts too.
Thanks very much!!

Archi_Bald

mrsp1987 wrote: »

Even if I do pay tax on my 5% interest earnings, once that has been deducted I'll still probably be better off than paying no tax on 1.5%.

Not just "probably", but "100% certainly".

balf

Where is this 5% savings account?

David

mrsp1987

balf wrote: »

Where is this 5% savings account?

David

There is a TSB linked regular savings account that gives 5% interest. You have to open a TSB current account and fulfill a few other criteria (£500 paid in monthly and 2 direct debits etc,) to qualify. With the current account itself you also get paid 5% interest on balances up to £2000. Also, if you start a switch by February 8th through this site you can get £100 cashback, which is what I did.
Having done a bit of looking around because I have nearly £30K to save I'm not going to benefit from most of these high interest rates. Santander 123 only pays up to £20K. I'll keep looking though. I've got the time and inclination to hunt for the best deal for me.