30k ISA question

Hello,

I have been working & living at home for 3 years and have managed to save 30k

It's currently in 3% savings account but should I move it to a cash ISA?

What are the benefits of moving it to an ISA?

And would I only be allowed to move 20k into an ISA?

Bit confused! Thanks

Replies

  • edited 22 February at 12:30PM
    tripledtripled Forumite
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    edited 22 February at 12:30PM
    With normal savings, you may get a tax free annual allowance for interest received, depending on income. For a typical basic rate tax payer it is £1000, less if you are in a higher tax bracket. You pay income tax on any interest earned over the allowance.

    You can put up to £20,000 per year in an ISA. Interest earned on savings in an ISA don't count towards the savings allowance and there is no tax payable, irrespective of how much interest is earned.

    If you wanted, you could pay £20,000 into an ISA now, and then from 6th April you could put up to another £20k in. Often people will have a split - some of their savings in an ISA so they are protected from the tax, and some in an easy access savings account taking advantage of the savings allowance.

    At 3% you should be earning roughly £900 per year in interest, not far off needing to start paying income tax (or if you are in the higher/additional rate tax bracket you should already be paying tax on it). It may be prudent to move some of you savings into an ISA unless you are planning to spend some of your savings soon, as a small increase in interest rates and/or continuing to add to your savings will soon bring you into the scope of being taxed on your interest.
  • Band7Band7 Forumite
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    There's a dedicated ISA board which should have the answers to your questions.
    https://forums.moneysavingexpert.com/categories/isas-tax-free-savings
  • eskbankereskbanker Forumite
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    Taking a step back, what are you likely to want to use the money for and when?

    If "working & living at home for 3 years" signifies that you live with parents in the family home (everyone lives at home!) then you might benefit from using specialist products such as Lifetime ISA if you're looking to save money for a deposit on your first property purchase, or if it's money that you want to have readily accessible for other purposes then keeping it in cash deposit form is likely to be best, but if not, then it might be worth considering options better suited for the longer term, such as investing inside or outside a pension?
  • xylophonexylophone Forumite
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    You could subscribe £20,000 to ISA before 6/4/23 and the balance afterwards.
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