Calculation for comparison of ISA v Tax on Interest

brucefan_2

A while back I read a couple of posts which I'm afraid I can't locate via search and I'd be grateful for some pointers from anyone who might know.

The posts included a calculation/formula for establishing what interest rate would be needed on taxable interest to be more beneficial than any given interest rate within a Cash ISA wrapper.

Any advice/help/pointers would be much appreciated.

Best Wishes,
David

Dazed_and_C0nfused

brucefan_2 said:

A while back I read a couple of posts which I'm afraid I can't locate via search and I'd be grateful for some pointers from anyone who might know.

The posts included a calculation/formula for establishing what interest rate would be needed on taxable interest to be more beneficial than any given interest rate within a Cash ISA wrapper.

Any advice/help/pointers would be much appreciated.

Best Wishes,
David

For most people the simple way of looking at is that an ISA needs to be within 80% of the non ISA account to be better.

5.25% less 20% tax = 4.20%

ISA of 4.21% or more beats that.

But higher rate tax, unused Personal Allowance and the 0% tax rates add complexity for some people.

brucefan_2

@Dazed_and_C0nfused

Thankyou!
David