Value of Bonds and ISAs dropping by half

roysty

After years of building up a Tax Free ISA accounts, to protect my savings interest from tax, I now face the fact that NO ISA pays interest to make the tax free status worth while. Isn’t it time the rules were changed to give the Capital tax free status, so that we could take advantage of the “better” interest available on other accounts. Once again the Banks/ Building societies are defeating the ISA platform with their derisory rates.

eskbanker

roysty said:

After years of building up a Tax Free ISA accounts, to protect my savings interest from tax, I now face the fact that NO ISA pays interest to make the tax free status worth while. Isn’t it time the rules were changed to give the Capital tax free status, so that we could take advantage of the “better” interest available on other accounts. Once again the Banks/ Building societies are defeating the ISA platform with their derisory rates.

If you feel the need to moan about cash ISA interest rates then you should start your own thread in which to do so, rather than hijacking this one about investment performance in S&S ISAs, but for the record the rules did change in 2016 with the introduction of the personal savings allowance, which permits savers to benefit from non-ISA accounts without paying tax.... 

bowlhead99

roysty said:

 I now face the fact that NO ISA pays interest to make the tax free status worth while. Isn’t it time the rules were changed to give the Capital tax free status, so that we could take advantage of the “better” interest available on other accounts. 

'Capital' does have tax free status, there is no UK tax on simply owning cash in an account. The ISA has the advantage that any income or capital gains generated from the capital is tax free.

You could move the money out of an ISA and into some other type of savings account if you prefer the interest available there. The capital itself is not taxable on withdrawing it from the ISA. The income generated by the capital going forward from that point on would still be taxable, if the interest is being generated outside an ISA. But that might be covered by other allowances of course.

Entirely different issue from the thread subject though, which is about performance of investment ISAs and the choice whether to save in cash or keep investing in shares and bonds.

masonic

roysty said:

After years of building up a Tax Free ISA accounts, to protect my savings interest from tax, I now face the fact that NO ISA pays interest to make the tax free status worth while. Isn’t it time the rules were changed to give the Capital tax free status, so that we could take advantage of the “better” interest available on other accounts. Once again the Banks/ Building societies are defeating the ISA platform with their derisory rates.

Since ISA flexibility has been introduced, it is possible to flexibly withdraw your money to benefit from better interest rates available on other accounts, so long as you return the money to the ISA for a day or two when the tax year rolls over. Obviously you cannot benefit from fixed term accounts with 1 year or longer maturity using this method, but it allows easy access, notice and short fixes to be used. Better still, if it is money you don't need to spend in the next decade, consider investing it for a better return.

dunstonh

Can we be careful not to take this thread off topic.  The OP's subject is not yet answered and is very interesting (as we are all wondering what he is invested in) and it would be unfair if thread hijacking by roysty prevented the help that the OP needs.