Best way to save?

SolidSnake_3

Hi everyone,

I'm a little unsure about savings accounts, ISAs and tax.

I've currently got £1000 in a cash ISA, with around £2400 left to deposit, the interest rate is 6%.

However, from September this year I will be paying around £364 per month into a savings account for the next 2 years.

The Halifax account, with its 10% rate, seems the most profitable. Am I best opening this accoutn, taking the £1000 out of my ISA, and then making the £364 deposits into the Halifax account until the 10% rate runs out?

Also, will I pay tax on the Halifax account? I've just left unversity and will be starting postgraduate study (part-time) in September.

Thanks!

KeithEssex_2

SolidSnake wrote: »

Hi everyone,

I'm a little unsure about savings accounts, ISAs and tax.

I've currently got £1000 in a cash ISA, with around £2400 left to deposit, the interest rate is 6%.

However, from September this year I will be paying around £364 per month into a savings account for the next 2 years.

The Halifax account, with its 10% rate, seems the most profitable. Am I best opening this accoutn, taking the £1000 out of my ISA, and then making the £364 deposits into the Halifax account until the 10% rate runs out?

Also, will I pay tax on the Halifax account? I've just left unversity and will be starting postgraduate study (part-time) in September.

Thanks!

Try not to touch your ISA as you will lose your tax free income from it for this and all future years on the £1,000.

It really depends upon your income and outgoings but personally I would contribute to the ISA first and make sure that the Regular Saver monthly contribution is at a level you can realistically afford from your income each month.

If you fail to keep up payments on the Regular Saver it reverts to the standard web-saver interest rate (which is Poor-Average).

Getting your interest without tax taken off

Yes - you will normally pay tax unless you complete a R85 form to state that your income will be less than your personal allowance for the year (typically £6,035).

http://www.direct.gov.uk/en/Diol1/DoItOnline/DG_4017954

Hope the above helps. Congratulations on passing your Degree.