About to hit my personal savings allowance - should I move my money to an ISA or elsewhere?

I've made £900 on my savings so far this year and wondered if I'd be better moving it to an ISA or other product. I have around £30K between a regular saver and a Chip account.

It's also my emergency fund and I could see myself using some of it for a house move or home improvements within the next year or two. 

I pay 20% tax and have LISA but I don't want to put anymore money in there presently as I value having access without penalty. 

Any suggested products or actions?

Comments

  • What is most important, avoiding paying tax or getting the best net return?

    Do you pay at least £1,000 in basic rate tax?
  • Adamc
    Adamc Posts: 440
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    What is most important, avoiding paying tax or getting the best net return?

    Do you pay at least £1,000 in basic rate tax?
    Highest return. I pay around £8K in tax. 
  • So the savings starter rate band isn't of any use to you and you should simply to stick to non ISA accounts unless you find an ISA which pays more than 80% of the best non ISA account you would use.

    For example non ISA account paying 5.25% would be 4.20% after tax (once full £1,000 savings nil rate band had been used) so an ISA paying 4.21% would beat that.
  • refluxer
    refluxer Posts: 2,539
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    edited 12 December 2023 at 8:30PM
    If the starter rate for savings doesn't apply and you've exceeded your PSA so will pay tax on your savings from now on, then your money will be better off in a flexible easy access ISA at the moment than it will be in a normal easy access savings account. (The same is true for fixed rate accounts currently, too).

    Eg. Metro Instant Access Cash ISA @ 5.11% vs Metro Instant Access @ 5.22% (or 4.18% after tax)

    If you don't have a Metro branch nearby to open their ISA and are happy with app-only banking, then the Zopa Smart ISA is the next-best option for unlimited access at 5.08% (the Moneybox ISA @ 5.09% only allows 3 withdrawals a year). Both the Metro and Zopa ISAs are flexible so you can replace withdrawn funds before the end of the tax year without them counting towards your ISA allowance.

    Just be cautious if Zopa's Fixed Term ISA pots look tempting, as all ISA pots held with Zopa are considered to be part of the same ISA (you just get one account reference number for all the pots) and partial transfers-out from Zopa aren't allowed which means that should you ever want to transfer out in the future and have any fixed term ISA pots running, you'd have to close them before maturity which would result in a penalty.
  • So at the moment interest rates in ISA and non-ISA accounts are pretty close.  Doesn't that make the ISA a no-brainer?  
    Reed
  • For you, yes.
  • penners324
    penners324 Posts: 2,603
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    Looking long term. Pensions?
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