Interest on Savings for non Tax payer?

1spiral

ColdIron said:

Everybody under 75 can contribute (broadly) 100% of their earnings (gross) and get tax relief. The £2,880 'trick' as you call it, is for non, or very low, earners

How does the above work if you have 0 income from salary/pension but have income from savings interest that exceeds this?

ColdIron

1spiral said:

ColdIron said:

Everybody under 75 can contribute (broadly) 100% of their earnings (gross) and get tax relief. The £2,880 'trick' as you call it, is for non, or very low, earners

How does the above work if you have 0 income from salary/pension but have income from savings interest that exceeds this?

If you have no earnings, or less than £3,600, you can still contribute £2,880 (£3,600 gross). Income from interest (or pension) has no bearing on it whatsoever

Section62

boingy said:

Regarding ISA vs non-ISA, even if you're currently a non-taxpayer I think it's always worth thinking about what your situation might be a few years from now. No-one knows whether ISA rules and limits will change and it might be worth putting some cash into an ISA this tax year even if you can get a slightly higher rate outside of an ISA. Once it's in an ISA it's tax-free forever, which could bring benefits in future years if you start earning or drawing a pension or whatever. The UK will have a new government this year (probably) and they are likely to fiddle with the tax regime in some way. I'll be using all of my ISA allowance in April, just in case!

It's not even a case of either or.

If you pick a flexible cash ISA then £20k can be deposited just before the end of the tax year, then withdrawn at the start of the new tax year and deposited in a non-ISA savings account paying a higher rate (if a suitable one exists at the time).

Rinse and repeat at the end of each tax year adding £20k each time.

That way a healthy ISA allowance can be accumulated without having to lose much in the way of interest if ISA rates were lower than non-ISA rates.

In addition, (part of) the accumulated ISA allowance could be transferred across to a S&S ISA if that was an attractive idea at some point in the future.