Atom 2.0% or continue with an ISA

tel_

My ISA is just about to mature, with £50,000 in it. I've always re-invested it back into another ISA in the past (and can add another £20,000 from my Santander 123 bank a/c for this years allowance if I so wish). Should I carry on with an ISA, and continue using the allowance, or is it wise to ditch ISA's now and take advantage of Atoms 2.05%? I understand an ISA doesn't count towards your annual PSA.

As mentioned, I have the Sandander 123 a/c which I have always kept £20,000 in, to take advantage of the interest paid each month. But I'm thinking I should definitely ditch this, and take most of my money out of it, as Santander still charge a £5 a/c fee for it.

Decisions, decisions :doh:

Any advice would be greatly appreciated.

Tel

Paul_DNAP

The Santander is headlined at 1.5%, but if you pay your monthly fee out of the interest then it drops to just over 1.2%, if you earn the monthly fee back out of the cashback on bills then you can consider it closer to the 1.5%.
There are ISAs that will beat the 2.05%, but you're going to have to lock it for a four or five year term, so if you were thinking of that then you'd be comparing it against the 2.50% Atom account and not the 2.05%
And yes, the interest earned on ISA does not get taxed and isn't counted in your PSA. This £50k at 2.05% is going to earn you £1,025 per year, so that alone will mean you're paying 20% tax on that £25 and any other savings interest you have (assuming you're a basic rate taxpayer), so pulling it all out of the ISA wrapper is gong to cost you a little bit in tax until you start funnelling it back into ISAs.

chockydavid1983

Do you need so much in cash? You could consider a S&S ISA.

tel_

Thanks for your reply Paul_DNAP. I am now thinking it might be best for me to stick with an ISA, exactly for the PSA reason.

I have never considered a Socks & Shares ISA chockydavid. Now you've mentioned it, I will do some reading on this site about them, as my knowledge on S&S is non-existent.

Dazed_and_confused

PSA isn't a tax free allowance but s 0% rate band so depending on your own circumstances you could have extra tax to pay because of your savings interest even if the interest itself is taxed at 0%.

And are you sure you are able to use the PSA? It is only of benefit above the £5,000 starter savings rate so some lower income individuals cannot make use of the PSA even if they £1,000 of taxable interest.

eskbanker

tel_ wrote: »

I have never considered a Socks & Shares ISA

Make a start, get your foot in the door! In-vest carefully, you don't want to lose your shirt....

System

eskbanker wrote: »

Make a start, get your foot in the door! In-vest carefully, you don't want to lose your shirt....

Choose a fund like Vanguard Lifestrategy with a mix of bonds and stocks.

cfw1994

Tarambor wrote: »

Choose a fund like Vanguard Lifestrategy with a mix of bonds and stocks.

A choice of mixes: could go all-in on 100% stock if you’re in it for the longer haul!! They do look a good low cost S&S ISA option; my kids (early 20’s) have opened one each, which I will help fund for a short while to try to kick-start some longer term savings for them.

tel_

I have just looked at the Vanguard Lifestrategy website, and it could be something I'm interested in. Which other 'all-in-one' funds should I look at that are similar to Vanguard's?

chockydavid1983

https://forums.moneysavingexpert.com/discussion/5677767/alternatives-to-vanguard-life-strategy-60

badger09

eskbanker wrote: »

Make a start, get your foot in the door! In-vest carefully, you don't want to lose your shirt....

Dip your toe in the water, but don't get cold feet when the market drops;)