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.