Do I need an ISA

booveedoo

Hi. I`m 57. I have £50000 in Premium bonds, £50000 in bank savings account (paying 3.8% AER), take £27000 a year in annuity payments. As a basic rate tax payer, do I need an ISA? Currently I do not have anything else to save. Thanks

Bigwheels1111

So you only get £1000 PSA, any more interes would be taxed.

So an Isa now and another in 24 would be good.

I see 3.8% wow thats bad, 6.2% is out there today.

I would take the best rate out there for your savings and add Premium bonds

money to it.

£50k is getting £1900 interest, so tax on £900 after PSA. Tax £180 leaves £1720.

£80K at 6.2% = £4960, £3960 taxable. Tax £992 leaving £3968.00 after tax.

I think I would pay the tax with a smile on my face.

Changing you rate and paying tax would leave you With £3968.00, That,s 

£2248.00 better off than you position today. That does not include any Premium bonds wins.

But you have not said if you win or not.

Select term 1,2,3,5 year and then rate order. Fixed rates,

https://moneyfactscompare.co.uk/savings-accounts/fixed-rate-bonds/

Isa, I a fan of Virgin money ISA as can change within Virgin,s 14 days cooling off period,

as their rates change. Ive gone from 5.2% to 5.5% and now 5.55%.

There rate should change in the next few days as 5.9% has hit the market,

https://moneyfactscompare.co.uk/isa/fixed-rate-isas/?quick-links-first=false

booveedoo

Hey, thanks for your reply. Very interesting.

Yes. I do win on premium bonds (50 and 100`s near each month). Not the big one yet, but I do like the "buzz" each month, so I`m leaving this money there. So I`ll just concentrate on my other 50k.

Are you saying a higher rate saving account is better for the full 50k, or an money ISA up to my 20k limit, with the other 30k into a 6.2% rate savings account?

dunstonh

As a basic rate tax payer, do I need an ISA? 

At your age, pension is likely to be the best tax wrapper.   ISA then comes next  (in most cases).

You don't mention any pension contributions in your post.

booveedoo

dunstonh said:

As a basic rate tax payer, do I need an ISA? 

At your age, pension is likely to be the best tax wrapper.   ISA then comes next  (in most cases).

You don't mention any pension contributions in your post.

Sorry. I`m now retired. So, ISA it`ll be then the rest into savings.

Bigwheels1111

booveedoo said:

Hey, thanks for your reply. Very interesting.

Yes. I do win on premium bonds (50 and 100`s near each month). Not the big one yet, but I do like the "buzz" each month, so I`m leaving this money there. So I`ll just concentrate on my other 50k.

Are you saying a higher rate saving account is better for the full 50k, or an money ISA up to my 20k limit, with the other 30k into a 6.2% rate savings account?

50K at 6.2% would give £2680 after PSA and Tax of £420.

30K at 6.2% + 20k Isa at 5.9%, £2868 after PSA and Tax of £172

dunstonh

booveedoo said:

dunstonh said:

As a basic rate tax payer, do I need an ISA? 

At your age, pension is likely to be the best tax wrapper.   ISA then comes next  (in most cases).

You don't mention any pension contributions in your post.

Sorry. I`m now retired. So, ISA it`ll be then the rest into savings.

Why does you being retired stop you from using the pension wrapper?

You say you are age 57.   You get until and including age 74 to use the annual non-earners allowance.

booveedoo

dunstonh said:

booveedoo said:

dunstonh said:

As a basic rate tax payer, do I need an ISA? 

At your age, pension is likely to be the best tax wrapper.   ISA then comes next  (in most cases).

You don't mention any pension contributions in your post.

Sorry. I`m now retired. So, ISA it`ll be then the rest into savings.

Why does you being retired stop you from using the pension wrapper?

You say you are age 57.   You get until and including age 74 to use the annual non-earners allowance.

Going to need to look into this then.

dunstonh

booveedoo said:

dunstonh said:

booveedoo said:

dunstonh said:

As a basic rate tax payer, do I need an ISA? 

At your age, pension is likely to be the best tax wrapper.   ISA then comes next  (in most cases).

You don't mention any pension contributions in your post.

Sorry. I`m now retired. So, ISA it`ll be then the rest into savings.

Why does you being retired stop you from using the pension wrapper?

You say you are age 57.   You get until and including age 74 to use the annual non-earners allowance.

Going to need to look into this then.

Do so because it is free money in your situation.

booveedoo

Bigwheels1111 said:

So you only get £1000 PSA, any more interes would be taxed.

So an Isa now and another in 24 would be good.

I see 3.8% wow thats bad, 6.2% is out there today.

I would take the best rate out there for your savings and add Premium bonds

money to it.

£50k is getting £1900 interest, so tax on £900 after PSA. Tax £180 leaves £1720.

£80K at 6.2% = £4960, £3960 taxable. Tax £992 leaving £3968.00 after tax.

I think I would pay the tax with a smile on my face.

Changing you rate and paying tax would leave you With £3968.00, That,s 

£2248.00 better off than you position today. That does not include any Premium bonds wins.

But you have not said if you win or not.

Select term 1,2,3,5 year and then rate order. Fixed rates,

https://moneyfactscompare.co.uk/savings-accounts/fixed-rate-bonds/

Isa, I a fan of Virgin money ISA as can change within Virgin,s 14 days cooling off period,

as their rates change. Ive gone from 5.2% to 5.5% and now 5.55%.

There rate should change in the next few days as 5.9% has hit the market,

https://moneyfactscompare.co.uk/isa/fixed-rate-isas/?quick-links-first=false

Why is the 80k taxed at 25%? 

Doctor_Who

booveedoo said:

Bigwheels1111 said:

So you only get £1000 PSA, any more interes would be taxed.

So an Isa now and another in 24 would be good.

I see 3.8% wow thats bad, 6.2% is out there today.

I would take the best rate out there for your savings and add Premium bonds

money to it.

£50k is getting £1900 interest, so tax on £900 after PSA. Tax £180 leaves £1720.

£80K at 6.2% = £4960, £3960 taxable. Tax £992 leaving £3968.00 after tax.

I think I would pay the tax with a smile on my face.

Changing you rate and paying tax would leave you With £3968.00, That,s 

£2248.00 better off than you position today. That does not include any Premium bonds wins.

But you have not said if you win or not.

Select term 1,2,3,5 year and then rate order. Fixed rates,

https://moneyfactscompare.co.uk/savings-accounts/fixed-rate-bonds/

Isa, I a fan of Virgin money ISA as can change within Virgin,s 14 days cooling off period,

as their rates change. Ive gone from 5.2% to 5.5% and now 5.55%.

There rate should change in the next few days as 5.9% has hit the market,

https://moneyfactscompare.co.uk/isa/fixed-rate-isas/?quick-links-first=false

Why is the 80k taxed at 25%? 

Any taxable interest above the PSA is taxed at 20% (unless you are a HR tax payer, when it is 40%).