Isa or Fixed rate saving??
mikeparr1978
Forumite Posts: 2
Newbie
Any help appreciated, I m a bit confused around the taxation. I m a normal rate tax payer. I have 40’000 to either put in an isa or fixed 12 month saving. The fixed saving has a better interest rate of 6% compared to 5.5 on the isa. However will I pay more tax on the fixed rate?? Many thanks
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You multiply the 5.5% by 1.25 which gives you 6.78% so the ISA is better. However you can only put £20,000 in that.2

20k in the isa 20k in the fixed saver.
You'll pay £40 in tax in the year on the fixed saver but no way around that unless you want to take a gamble with premium bonds, but you'll need to be very very lucky to beat the interest on the fixed saver even after tax.Ex Sg27 (long forgotten log in details)Massive thank you to those on the long since defunct Matched Betting board.1 
mikeparr1978 said:Any help appreciated, I m a bit confused around the taxation. I m a normal rate tax payer. I have 40’000 to either put in an isa or fixed 12 month saving. The fixed saving has a better interest rate of 6% compared to 5.5 on the isa. However will I pay more tax on the fixed rate?? Many thanks
You can only put £20k in an ISA each tax year. £20k @ 5.5% = £1100.If you put the other £20k in the FR @ 6%, interest will be £1200 less tax due (£200 @ 20%) £40 = £1160. So £2260 total.Seems like your best option.
Hope my maths hasn’t let me down. Some 🍷 🍷 has been consumed😊3 
mikeparr1978 said:Any help appreciated, I m a bit confused around the taxation. I m a normal rate tax payer. I have 40’000 to either put in an isa or fixed 12 month saving. The fixed saving has a better interest rate of 6% compared to 5.5 on the isa. However will I pay more tax on the fixed rate?? Many thanks
I'm investing in savings too but not yet in an isa because I won't be taxed on my fixed savings interest
1
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