Help with cash heads battered

allnightuk

Hi I have 20k in a chase standard savings account I can save about
 2-5k a year  my question is do I open a ISA n put  it in there or what should I do with it my heads battered with all this tax talk that I don't really understand stand pls help 

Woodstok2000

It really depends on your tax situation.  If you're a basic rate taxpayer you can earn £1000 in interest before you pay tax, so with £20k savings, if you're getting 5% interest or more you'd be better off using an ISA for at least part of it, as ISA interest is tax free.

If you're a higher rate tax payer you can only get £500 tax free, so that is only a 2.5% interest rate before you start paying tax on the interest..

If you're saving £2-5k per year, you'll soon hit the tax free allowance limit.  If it was me, I would open an ISA with £10-15k and put the remainder in a high interest savings account.  I'd then split my annual savings between the ISA and the savings, keeping a careful eye on the interest payments to make sure you avoid paying tax.

SVaz

You are quite close to having to pay tax, assuming you are a basic 20% payer and don’t have the starter savings rate available (  basically for a part time or non worker). 

Open an ISA and put £15k (or more) in,  that keeps you out of tax completely.
Hargreaves Lansdown have a good cash ISA with Shawbrook paying 4.06% currently.
I also use their Active savings product where you can easily switch to a better rate for ordinary savings accounts.  

LHW99

Added to which the annual ISA allowance is use it or lose it. And as rules can be changed (though hopefully not retrospecively) you may as well take advantge now. Cash ISA accounts mainly behave just like ordinary savings accounts.