ISAs vs Saving accounts etc.

potatobrains

Hi All. Do the banks/govt not want us to use cash ISAs any more? The NS&I Direct Saver is 1% interest, their Direct ISA is 0.9%. I've got £45k in a cash ISA, but it seems like it'd be best to move some or all of it out & into something else, and the NS&I ones don't look much worse than the rest. Have people generally given up on cash ISAs & I'm the last to do so? Would putting it all into the NS&I bonds be an even better idea (I've already got some investments in an stock & shares ISA)? I'm a basic rate tax payer & I don't see me getting enough to exceed the £1k interest=no tax barrier. Any thoughts please?

kuratowski

Yes!  For a majority of people Cash ISAs are not useful anymore - this has been the case for a few years now.

For pros and cons read the article linked below
https://www.moneysavingexpert.com/savings/best-cash-isa/#tip1

eskbanker

potatobrains said:

Do the banks/govt not want us to use cash ISAs any more?

I don't think they're particularly bothered one way or the other, but it would always be recommended on here to put your money where it works best for you rather than being swayed by what suits such bodies....

potatobrains

Thanks both. So, ISAs are pretty much pointless now for most people including me, got it, thanks.

JoDo45

It depends on people's situation and how much tax you pay 

Dazed_and_C0nfused

potatobrains said:

Thanks both. So, ISAs are pretty much pointless now for most people including me, got it, thanks.

Most people have to have taxable income of at least £18,501 before any tax is actually payable on interest so for a lot they are not of any benefit.

colsten

potatobrains said:

Thanks both. So, ISAs are pretty much pointless now for most people including me, got it, thanks.

I would suggest it's not that simple.

Dazed_and_C0nfused said:

Most people have to have taxable income of at least £18,501 before any tax is actually payable on interest so for a lot they are not of any benefit.

Median UK income in the last tax year was £29,600, ie. more than half of those with a taxable income would have to pay tax on any savings interest above their personal savings allowance.

Around 14% (~4.3m) of all taxpayers are HR or AR payers. For them, cash ISAs might well still be relevant. Even some BR tax payers - I am thinking retired people specifically - might find find cash ISAs very relevant.

S&S ISAs are very relevant for all personal investors, as they save them tax, and admin effort.

LISAs should be of interest to most people saving for their first property.

JISAs are still a superb vehicle for kids' savings.

Some people even like IFISAs.

coachman12

Forget ISAs. I have quite a number of NS&I Bonds , short, medium and long term ones, with interest rates as high as 2.5%. With the collapse of easy access interest rates, I recently transferred even more to NS&I, including all the easy access amount I need , from my previous Marcus and RCI easy access accounts. The NS&I easy access at 1.16% may sound poor, but it's the best around ( and requires a 2 month warning of any proposed reduction in interest rate). I feel very happy to be relying very heavily in short, medium and long term with NS&I.
I am as happy with my shares portfolio which is doing very well, though I have had a bit of a "shuffle" of its contents recently-----as I was mentioning recently on another thread concerning my large Astra Zeneca holdings. 

colsten

coachman12 said:

Forget ISAs. 

Thanks for your suggestion.

I will absolutely definitely 100% not forget my S&S ISA as it would be a pretty irrational thing to do.

I don't have any JISA or LISA but I reckon it would be equally irrational to forget them.

As to NS&I Bonds, those presently paying more than 1.16% are closed to new applicants so they are not an alternative for people looking for new savings accounts. The 1.16% Income Bond might be a viable alternative for some if the T&Cs of the account suit - which they don't for many people (e.g. those who don't have £500 at a time to put away). I would definitely not consider a 1.16% AER cash account a viable alternative for my long term investments, and I don't consider it the best place to park my cash emergency fund as long as I have access to current and regular savings accounts that pay much better than 1.16%. 

Perhaps you weren't quite meant to suggest what you did?

coachman12 said:

I am as happy with my shares portfolio which is doing very well, though I have had a bit of a "shuffle" of its contents recently-----as I was mentioning recently on another thread concerning my large Astra Zeneca holdings. 

Is your shares portfolio in one or more tax wrappers? S&S ISA? SIPP? LISA?

Do you have kids/grandkids with JISAs?

coachman12

colsten said:

coachman12 said:

Forget ISAs. 

Thanks for your suggestion.

I will absolutely definitely 100% not forget my S&S ISA as it would be a pretty irrational thing to do.

I don't have any JISA or LISA but I reckon it would be equally irrational to forget them.

As to NS&I Bonds, those presently paying more than 1.16% are closed to new applicants so they are not an alternative for people looking for new savings accounts. The 1.16% Income Bond might be a viable alternative for some if the T&Cs of the account suit - which they don't for many people (e.g. those who don't have £500 at a time to put away). I would definitely not consider a 1.16% AER cash account a viable alternative for my long term investments, and I don't consider it the best place to park my cash emergency fund as long as I have access to current and regular savings accounts that pay much better than 1.16%. 

Perhaps you weren't quite meant to suggest what you did?

coachman12 said:

I am as happy with my shares portfolio which is doing very well, though I have had a bit of a "shuffle" of its contents recently-----as I was mentioning recently on another thread concerning my large Astra Zeneca holdings. 

Is your shares portfolio in one or more tax wrappers? S&S ISA? SIPP? LISA?

Do you have kids/grandkids with JISAs?

It is only polite to thank you for your post and to reply.
I stick to my advice to the O/P, potatobrains, that he should forget ISAs.  Martin Lewis has just stated the following and I agree with him

"""1. All savings are now paid tax-free, so consider if a cash ISA is worth it for you

On 6 April 2016 the personal savings allowance (PSA) launched, which means all savings are now automatically paid tax-free. Basic 20% rate taxpayers can earn up to £1,000 interest a year without needing to pay tax on it, higher 40% rate taxpayers £500 (top 45% taxpayers will always pay tax on savings).

For most people that will be enough to make all their savings tax-free, and therefore the question is simply "what pays the highest rate?"

Currently, the answer to that is normal savings, especially when it comes to fixes. So before you opt for an ISA, check if you really need one – unless you're a top-rate taxpayer or have very large savings, you can get better returns with top normal savings.  """"

                                                  ---------------------------------

I am talking only about NEW ISAs and I would not recommend them to anyone now.

And NS&I 1.16% is recommended for new short-term easy access savings. I am quite well aware that my higher rates up to 2-3% NS&I accounts are no longer available to new applicants, so I will review what to do when my various longer term NS&I accounts expire. I never recommended NS&I latest 1.16% easy access Bond for medium or long term use. But I have just transferred all my easy access Marcus and RCI account savings to the NS&I 1.16% Bonds.

My shares portfolio is quite unconnected with any form of ISA. My shares are a portfolio in the purest sense of the word and cover a very wide range of sectors, managed by a longstanding personal financial adviser and stockbroker. No "Tax Wrappers" to quote that pretentious term. And  "No", I have nobody even vaguely connected to JISAs.

Hope that covers your questions, because I do not intend to post "to and fro" with you. I have noticed in so many of your postings that you believe only you and you alone are the elitist poster about savings issues. Let's leave O/Ps and all other MSE members make up their own minds based on posts which give disparate opinions ( like mine and Martin Lewis' )-----and not just yours. OK ?

2unlimited91

coachman12 said:

My shares portfolio is quite unconnected with any form of ISA. My shares are a portfolio in the purest sense of the word and cover a very wide range of sectors, managed by a longstanding personal financial adviser and stockbroker. No "Tax Wrappers" to quote that pretentious term. And  "No", I have nobody even vaguely connected to JISAs.

My wife opened an ISA, and that's why I divorced her.