ISA, fixed rate savings, or both?

Doubleshotdamo

With the increase in savings rates lately, I have worked out I'll be paying tax on some of my interest if I open a fixed rate account.
Is there any advantages to opening a fixed rate ISA for a year and filling it, and a top fixed rate account for a year, or just putting all savings into the top fixed account for a year? I'd also have a virgin money account paying 1.79% with some money in it for easy access. Working it all out, the nett amount of interest doing either way is similar (about £20 in it in favour of all money in the fixed rate account, and a bit in the virgin account).
I'd just rather not pay much tax. 
Any advice welcome, as I have two fixed rates coming to an end shortly, and in November. 
Thanks. 

MX5huggy

With rates rising I think getting money into ISA is coming back into being the better option, if rates are 4% (or 6%)  next year you’ve moved £20k to a tax free wrapper and you have next years allowance to use then. Whereas not using the ISA this year could cost you more tax next year. 

msallen

Rather than worrying about how much tax you will pay, worry about how much nett interest you will gain - there's no point deliberately earning £100 less interest in order to pay £20 less tax as you'll be £80 worse off. 

RG2015

Doubleshotdamo said:

With the increase in savings rates lately, I have worked out I'll be paying tax on some of my interest if I open a fixed rate account.
Is there any advantages to opening a fixed rate ISA for a year and filling it, and a top fixed rate account for a year, or just putting all savings into the top fixed account for a year? I'd also have a virgin money account paying 1.79% with some money in it for easy access. Working it all out, the nett amount of interest doing either way is similar (about £20 in it in favour of all money in the fixed rate account, and a bit in the virgin account).
I'd just rather not pay much tax. 
Any advice welcome, as I have two fixed rates coming to an end shortly, and in November. 
Thanks. 

Which Virgin Money east access account do you have? Mine only pays 1.71% AER.

In answer to your question, it all depends on whether you earn enough interest to pay tax on it in any particular year. Fixed rate accounts invariably pay interest upon maturity, at which point it becomes taxable.

Bear in mind that a 2.00% account becomes 1.60% if taxable. Therefore you would need an ISA paying above 1.60% to be better off.

The link below may help you.

https://www.gov.uk/apply-tax-free-interest-on-savings

Doubleshotdamo

RG2015 said:

Doubleshotdamo said:

With the increase in savings rates lately, I have worked out I'll be paying tax on some of my interest if I open a fixed rate account.
Is there any advantages to opening a fixed rate ISA for a year and filling it, and a top fixed rate account for a year, or just putting all savings into the top fixed account for a year? I'd also have a virgin money account paying 1.79% with some money in it for easy access. Working it all out, the nett amount of interest doing either way is similar (about £20 in it in favour of all money in the fixed rate account, and a bit in the virgin account).
I'd just rather not pay much tax. 
Any advice welcome, as I have two fixed rates coming to an end shortly, and in November. 
Thanks. 

Which Virgin Money east access account do you have? Mine only pays 1.71% AER.

In answer to your question, it all depends on whether you earn enough interest to pay tax on it in any particular year. Fixed rate accounts invariably pay interest upon maturity, at which point it becomes taxable.

Bear in mind that a 2.00% account becomes 1.60% if taxable. Therefore you would need an ISA paying above 1.60% to be better off.

The link below may help you.

https://www.gov.uk/apply-tax-free-interest-on-savings

Hi, sorry, my mistake, 1.71%

isasmurf

 The differences between the top accounts for ISAs and non ISAs is generally smaller on easy access at the moment, where you can get similar rates in the top ISAs to the top non ISAs. This isn't the case in the fixed rate market, where basic rate taxpayers make no to little gain in an ISA to their non ISA equivalent after tax.

I assume you have a Virgin current account so one option you may want to consider to reduce your taxable interest is to use your ISA allowance to move your easy access savings to Virgin's exclusive easy access cash ISA. This is a flexible ISA paying 1.75% available only to their current account holders. It would give you a little extra headroom for the higher returns on standard fixed rate accounts that falls within the savings interest allowance.