Are there any benefits in a cash ISA

joonee

Am I missing something? Every ISA provider I have checked offer a fixed rate cash ISA at 0.2% less than their fixed rate bond for the same investment period. 
10K invested at 1% would yield £100 less 20% tax leaves £80 
10K invested at .8% in an ISA would yield £80.  
The benefit in the ISA is enjoyed by the financial institutions, and non tax payers will miss out if they invest in an ISA.
As I said at the start - Am I missing something

Albermarle

Yes you are missing something. Basic rate taxpayers can earn up to £1000 in interest without paying tax .
So non taxpayers and the majority of taxpayers will miss out by investing in  a cash ISA due to the generally lower interest rates on offer . The reason they offer lower rates is that they are more complicated to operate than a normal account due to the tax rules and reporting.

ratechaser

Still not a bad option for additional rate tax payers that get zero savings allowance...

droopsnoot

The thing with an ISA is that you can only put in so much per year, and once the year has gone, that limit has gone too. So if we get back to a point where interest rates are higher again, you may regret not using as much of your annual limit - I regret not "getting in" sooner, just because I didn't spend any time researching and just let money in normal savings accounts. You just have to decide whether or not you think interest rates will rise enough to mitigate the lower interest you have to live with for now.

joonee

ratechaser said:

Still not a bad option for additional rate tax payers that get zero savings allowance...

Yes it makes sense for higher rate tax payers

joonee

Albermarle said:

Yes you are missing something. Basic rate taxpayers can earn up to £1000 in interest without paying tax .
So non taxpayers and the majority of taxpayers will miss out by investing in  a cash ISA due to the generally lower interest rates on offer . The reason they offer lower rates is that they are more complicated to operate than a normal account due to the tax rules and reporting.

Sounds like you agree with me?

JustAnotherSaver

joonee said:

ratechaser said:

Still not a bad option for additional rate tax payers that get zero savings allowance...

Yes it makes sense for higher rate tax payers

Ah that group again. 

This has to be the only place I know where people in the higher rate are referred to in a way that implies majority. Not saying you've implied that here but just saying. 

I do wonder if a poll was ever conducted and answered straight instead of the usual politicians answer, what percentage of MSE would be higher rate, at least among the regular posters. 

Albermarle

JustAnotherSaver said:

joonee said:

ratechaser said:

Still not a bad option for additional rate tax payers that get zero savings allowance...

Yes it makes sense for higher rate tax payers

Ah that group again. 

This has to be the only place I know where people in the higher rate are referred to in a way that implies majority. Not saying you've implied that here but just saying. 

I do wonder if a poll was ever conducted and answered straight instead of the usual politicians answer, what percentage of MSE would be higher rate, at least among the regular posters. 

Approx 15% of taxpayers are paying some higher rate tax and about 2 % paying additional rate .
I guess you are right that the % on here will be higher but a lot of regular posters are already retired , so more likely they are ex higher rate taxpayers rather than current ones.

Alexland

...and some of us put enough in our pensions, reduce our hours and decline taxable benefits to avoid being higher rate taxpayers.

masonic

...then there are higher rate taxpayers who don't have enough cash savings to exceed their £500 Personal Savings Allowance.