Ditch the ISA for NSI

bfc_wurz

Hi all,
I already have the maximum savings I can in the new NS&I 1.16% bonds which comes in at just under £1000 a year tax free interest. 

However Im lucky enough to have more savings than that (90k) sat in an ISA currently only giving me 0.5% (and this was a new one I opened this year so I don't have the option of opening another one).

My logic tells me that I would be better off taking all my money out of the ISA and sticking it in NS&I where I would still make more interest even after the tax deductions on my interest over the £1000 allowance. However I do appreciate that if I take it out I can only load it back into an ISA at 20k a year and the NS&I could change.

Has anyone else considered this and the pro's and cons??

Regards
C

83705628

bfc_wurz said:

Hi all,
I already have the maximum savings I can in the new NS&I 1.16% bonds which comes in at just under £1000 a year tax free interest. 

However Im lucky enough to have more savings than that (90k) sat in an ISA currently only giving me 0.5% (and this was a new one I opened this year so I don't have the option of opening another one).

My logic tells me that I would be better off taking all my money out of the ISA and sticking it in NS&I where I would still make more interest even after the tax deductions on my interest over the £1000 allowance. However I do appreciate that if I take it out I can only load it back into an ISA at 20k a year and the NS&I could change.

Has anyone else considered this and the pro's and cons??

Regards
C

/
...you can have a £1 million of NS&I Income Bonds (https://www.nsandi.com/income-bonds), and 1.16% of a million is £11,600.

Albermarle

https://forums.moneysavingexpert.com/discussion/6167008/ns-i-switch-if-you-dare#latest

d63

bfc_wurz said:

Hi all,
I already have the maximum savings I can in the new NS&I 1.16% bonds which comes in at just under £1000 a year tax free interest. 

However Im lucky enough to have more savings than that (90k) sat in an ISA currently only giving me 0.5% (and this was a new one I opened this year so I don't have the option of opening another one).

My logic tells me that I would be better off taking all my money out of the ISA and sticking it in NS&I where I would still make more interest even after the tax deductions on my interest over the £1000 allowance. However I do appreciate that if I take it out I can only load it back into an ISA at 20k a year and the NS&I could change.

Has anyone else considered this and the pro's and cons??

Regards
C

if the isa is flexible you could perhaps withdraw some of the funds to purchase the income bonds but then sell up and put back the money before the end of the tax year to preserve the tax wrapper. 

EthicsGradient

As tcallaghan93 says in https://forums.moneysavingexpert.com/discussion/6172002/20k-fixed-rate-savings-premium-bonds-other-ideas#latest , Premium Bonds are worth considering now; the prizes are tax free, and the median effective interest rate (ie half of people get above this, half below) is about 1.3% now. That's a maximum of £50,000. But yes, you do lose the ISA privileges for money you take out of one now. You could transfer existing cash ISAs into stocks and shares ISAs, if you'd be happy with investment with possible losses as well as possible larger gains.

eskbanker

bfc_wurz said:

However Im lucky enough to have more savings than that (90k) sat in an ISA currently only giving me 0.5% (and this was a new one I opened this year so I don't have the option of opening another one).

Not true, there's nothing stopping you from opening a new cash ISA and transferring your existing one into it.

bfc_wurz

eskbanker said:

bfc_wurz said:

However Im lucky enough to have more savings than that (90k) sat in an ISA currently only giving me 0.5% (and this was a new one I opened this year so I don't have the option of opening another one).

Not true, there's nothing stopping you from opening a new cash ISA and transferring your existing one into it.

Ahhh right, I read somewhere you can only open one ISA per year. Are you suggesting I can open more than one as long as I transfer the full amount in and close it?

bfc_wurz

tcallaghan93 said:

bfc_wurz said:

Hi all,
I already have the maximum savings I can in the new NS&I 1.16% bonds which comes in at just under £1000 a year tax free interest. 

However Im lucky enough to have more savings than that (90k) sat in an ISA currently only giving me 0.5% (and this was a new one I opened this year so I don't have the option of opening another one).

My logic tells me that I would be better off taking all my money out of the ISA and sticking it in NS&I where I would still make more interest even after the tax deductions on my interest over the £1000 allowance. However I do appreciate that if I take it out I can only load it back into an ISA at 20k a year and the NS&I could change.

Has anyone else considered this and the pro's and cons??

Regards
C

/
...you can have a £1 million of NS&I Income Bonds (https://www.nsandi.com/income-bonds), and 1.16% of a million is £11,600.

Hi, I know that. Im talking about avoiding paying tax on interest, which you do after the first £1000 interest, do you follow?

garmeg

bfc_wurz said:

eskbanker said:

bfc_wurz said:

However Im lucky enough to have more savings than that (90k) sat in an ISA currently only giving me 0.5% (and this was a new one I opened this year so I don't have the option of opening another one).

Not true, there's nothing stopping you from opening a new cash ISA and transferring your existing one into it.

Ahhh right, I read somewhere you can only open one ISA per year. Are you suggesting I can open more than one as long as I transfer the full amount in and close it?

Correct. By transferring the old ISA it effectively ceases to exist and is replaced by the new one.

83705628

bfc_wurz said:

tcallaghan93 said:

bfc_wurz said:

Hi all,
I already have the maximum savings I can in the new NS&I 1.16% bonds which comes in at just under £1000 a year tax free interest. 

However Im lucky enough to have more savings than that (90k) sat in an ISA currently only giving me 0.5% (and this was a new one I opened this year so I don't have the option of opening another one).

My logic tells me that I would be better off taking all my money out of the ISA and sticking it in NS&I where I would still make more interest even after the tax deductions on my interest over the £1000 allowance. However I do appreciate that if I take it out I can only load it back into an ISA at 20k a year and the NS&I could change.

Has anyone else considered this and the pro's and cons??

Regards
C

/
...you can have a £1 million of NS&I Income Bonds (https://www.nsandi.com/income-bonds), and 1.16% of a million is £11,600.

Hi, I know that. Im talking about avoiding paying tax on interest, which you do after the first £1000 interest, do you follow?

/
Oh haha sorry my bad.
So your choices are:
1. Keep it tax free in an ISA
2. Between you and your partner buy £90k NS&I premium bonds, all "interest" or prizes are tax-free
3. Buy £90k income bonds for the guaranteed interest and take the tax hit.
4. If you already have that much cash, why not transfer the cash ISA to a stocks & shares ISA?

eskbanker

bfc_wurz said:

eskbanker said:

bfc_wurz said:

However Im lucky enough to have more savings than that (90k) sat in an ISA currently only giving me 0.5% (and this was a new one I opened this year so I don't have the option of opening another one).

Not true, there's nothing stopping you from opening a new cash ISA and transferring your existing one into it.

Ahhh right, I read somewhere you can only open one ISA per year. Are you suggesting I can open more than one as long as I transfer the full amount in and close it?

Yes, there is no rule about opening one per year, although this is a common misconception.  The actual rule is that you can only pay new money into one ISA of each type (such as cash) in any tax year, but, as pointed out above, you can transfer from one to another without breaching this, as long as you keep all current year contributions together.