ISA or Easy Access

Can someone advise.  My partner is looking to invest around £60k until we find the correct house for a relocation (hopefully over the next 12 months).  He currently doesn't have either an ISA or a savings account, just a current account.  He is a tax payer.  Is it worth opening an ISA AND a savings account given the short amount of time it may be invested?  Thanks

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  • eskbanker
    eskbanker Posts: 29,775
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    The annual contribution limit for ISAs is £20K, so it won't all go into an ISA anyway, but there isn't really enough to go on there to give a definitive answer - the best approach is generally to maximise net return, which may or may not involve using an ISA, depending on tax rate, other savings, etc.
  • masonic
    masonic Posts: 22,794
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    Having £40k outside of an ISA will likely consume any tax free personal savings allowance within the 6 months remaining of this tax year. He would need to do the sums, comparing ISA and normal savings rates on £20k for the estimated period he is likely to save, to see if any tax saving would outweigh the likely reduced interest rate on an ISA. After the first 6 months, he could have £40k in an ISA, but nobody knows where rates would be at that stage. It would be something to re-evaluate towards the end of this tax year, as the whole £40k could be deposited during March-April.
  • Doctor_Who
    Doctor_Who Posts: 908
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    Rob_SP said:
    Can someone advise.  My partner is looking to invest around £60k until we find the correct house for a relocation (hopefully over the next 12 months).  He currently doesn't have either an ISA or a savings account, just a current account.  He is a tax payer.  Is it worth opening an ISA AND a savings account given the short amount of time it may be invested?  Thanks
    At ~5% the interest will be ~£1500 in 6 months. If it's outside an ISA, then £1000 interest may be covered by the PSA (depends on tax band, other savings interest etc), so some tax will be payable. Better that than zero interest earned in a current account.
    'Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it' - Albert Einstein.
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