Top Cash ISAs Discussion Area

crispeater

please dont shoot me if i'm asking a question thats already been asked and answered. there are just too many questions/pages to read and i'm getting a headache lol

i currently have some savings in an online lloydstsb account which is rubbish as they have dropped the interest rate again. i've done what martin said and used my savings to pay off my debts so the little bit i have left i want to put in an isa. i think there was one that had 6.25% which i thought was ok. i am hoping to put around £50 a month into it which i worked out should bring me in £200 interest. now i know i can save up to £3K this financial year and then £3.6K in the next financial year. my question is is there actually a limit as to how much can be in 1 cash ISA? does all the money in there remain tax free for the duration its in there?

thats where i get confused.. if i've got £3k in there this year and thats tax free and then next year i put more money in say £1K does that whole £4K remain tax free ???


thanks for any help

JimmyTheWig

crispeater wrote: »

i know i can save up to £3K this financial year and then £3.6K in the next financial year. my question is is there actually a limit as to how much can be in 1 cash ISA? does all the money in there remain tax free for the duration its in there?

thats where i get confused.. if i've got £3k in there this year and thats tax free and then next year i put more money in say £1K does that whole £4K remain tax free ???

Yes, the whole lot remains tax free. The only limit is how much you can put in in any one tax year.

crispeater

excellent!

thank you

JimmyTheWig

Davioo wrote: »

But my point is that the ISA interest will be being acrued over my lifetime, and the overdraft/card would be paid off in the relatively near future. Wouldn't that mean that in the long run more money would be earned from the ISA than spent on the borrowing?

The only way it could possibly be worth borrowing at a "high" rate to save at a "low" rate would be if in future years you plan to fill up both your cash ISAs.

Lets say you borrow £1000 and pay it back £100 a month for 11 months (i.e. it costs £100 interest).
Lets say that £1000 in your ISA earns you £50 in that time.
We'll call this scenario A.

In scenario B you don't borrow the money and put the £100 a month for 11 months into a taxed savings account. Assuming you are both high rate tax payers (to make the example most extreme) then lets say you gain around £15 in interest from this.

In scenario C you again don't borrow the money and put the £100 a month for 11 months into an ISA. You earn around £25 in interest from this.
This scenario is only possible if you haven't already filled next years ISA.

At the end of 11 months you would have
Scenario A: £1050
Scenario B: £1115
Scenario C: £1125

C is the winner though not possible if ISA already full. B is better than A.

But your point is that with A the money can continue to earn interest tax free. And using the above assumptions, 3 years later the £1050 in the ISA will have grown to £1231 while the £1115 in the savings account will only have grown to £1228.

Scenario C is clearly the best because that gives you the highest amount that can earn tax free interest.


Please note that I plucked these figures out of thin air. Hopefully you can follow them.
Basically what I am saying is that it is only worth thinking about if you are going to fill your ISA allowances (without borrowing) every year for the next few years.

galacticgreen

so02see wrote: »

it depends if you are both tax payers and at what rate and the rate you get on the ISA you pick. Use Martins calc to work out which is best for you
http://www.moneysavingexpert.com/mortgages/mortgages-vs-savings#calculator

Thanks for that I'll have a go...

spspyrou

I notice that the Alliance & Leiccester isa link at http://www.moneysavingexpert.com/savings/ISA-guide-savings-without-tax
is wrong... this should point to their new isa page http://www.alliance-leicester.co.uk/savings/index.asp

Gordal

Could someone tell me - can my wife, who is a none-tax payer, have a Mini Cash ISA?

I KNOW that she can.... However what I need to know is , does she gain ANY advantage, tax-wise or otherwise in so doing?

Thanks - Gordal.

Crabman

Gordal wrote: »

Could someone tell me - can my wife, who is a none-tax payer, have a Mini Cash ISA?

I KNOW that she can.... However what I need to know is , does she gain ANY advantage, tax-wise or otherwise in so doing?

Thanks - Gordal.

If she becomes a taxpayer in the future then whatever ISA funds she has put aside will have interest paid tax-free whereas normal savings interest will be taxed.

English_Bob

phill79 wrote: »

It says on their page:

"Transfer in existing ISA funds from 6 April 2008 – all we ask is that 50% or more of your previous years’ transferred funds go into a Stocks & Shares..."

I assume this means that if you only have a cash ISA, this product is no good for a full transfer. Is this correct?

no, i wouldn't transfer in.... i'm not a big fan of stocks and shares ISA's, but i suppose long term they'll be ok. I am opening new cash ISA's as so far had been paying into my offset mortgage. i would be tempted to leave the previous ISA's where they are or transfer to another financial institution with a good rate and no tie-ins, and open a NEW ISA with A+L.

Bob

Sarahcat

HI Crabman,
Just to say thanks-I've managed to get my ISA account with A & L and I was actually approved in ten minutes!
Looking forward to letting them transfer in my present ISA money and then adding the next lot!
How pleasant it is to save money going to the gov!!
S.:j