Regular Savers with Lloyds and Halifax - worth upgrading interest?

Ceejay3000

Band7 said:

kaMelo said:

where_are_we said:

It`s "crunch time" (optimum time to change is at the end of the month because you can get in 2 x £250 monthly deposits into the new RS for 1/4/23) whether to "stick" with my Halifax RS @4.5% or renew to a new RS@5.5%. I have decided to renew because (1) 5.5% is fixed and maybe fixed rates are near their peak - there is a question mark over if a Halifax RS @5.5% fixed will still be available in 6 months time when your old RS would mature (2) My "sort of" easy access accounts are rising - YBS loyalty 6 access e saver (NLA) is going up to 3.75% soon and YBS Loyalty 6 access e isa saver (which is flexible) is also going up to 4.25% so the "premium" that a 4.5% RS has is reducing. (3) I do not need to use up one of my withdrawals from my 6 access YBS accounts this month to fund my total RS SO`s at the beginning of next month if I withdraw £1517.63 including interest from old Halifax RS (it helps with cash flow).

How did I not notice this account?
Given the uplift in rates over the last twelve months paying tax on interest has become a consideration again.
Given that YBS ISA is flexible and paying 4.25% from 05/04/23 a non ISA account would have to be paying 5.31% for BR tax payers or 7.08 for HR tax payers. 

Essentially if you're going to pay tax on savings interest next year you would be better off to "renew" all LBG regular savers and dump the proceeds of those accounts into the YBS ISA.
if you will exceed the PSA from non regular savings accounts then as a basic rate tax payer it is worth starting again at the higher rates. As a higher rate tax payer however the YBS ISA will pay more than every regular saver currently available. 

It goes without saying, surely, that people make use of their ISA allowance if they bust their PSA, whether from Regular Savers or from other savings accounts? Just like they would use additional pension contributions, if at all possible, to reduce their tax liability. They also wouldn’t normally wait until the end of a tax year to make such tax saving provisions, but would take action as close as possible to April 6. What type(s) of ISA choose would depend on their circumstances.

The problem this year is that people may have built up high balances in non-ISA accounts in previous years, and it didn't matter until now due to the low levels of interest they were bringing in. But the rapid increase in interest rates has means the interest has rapidly increased towards the PSA, and they haven't been able to move enough into ISAs (moving money from taxable accounts to ISAs obviously uses up allowance), when they may already have been using their allowance for their normal monthly ISA savings in parallel.