ISAs - idiot question

[ChevronB19]

In the spirit of ‘there’s no such thing as a stupid question’…

If I need easy access to savings, and the interest I receive is below my personal allowance, is there any benefit to a cash ISA as opposed to a savings account paying a similar (or the same) rate of interest?

[Audemars]

In short, No.

When people invest in ISAs, they usually invest in Stocks and Shares ISAs where the long term return will exceed any allowance.

Cash ISAs are a waste of time.

[duckson]

Not really, unless if it's a larger amount and you keep it in the ISA and add to it the tax year after which then would take you above your PSA.

Even then it might be better taking the tax hit if the ISA percentage is substantially less than the non-ISA percentage!

[duckson]

Audemars said:

In short, No.

When people invest in ISAs, they usually invest in Stocks and Shares ISAs where the long term return will exceed any allowance.

Cash ISAs are a waste of time.

They definately used to be a waste of time although with interest rates rising they are something to keep an eye on currently (certainly a fixed one maybe).

[ChevronB19]

Thanks all, much as I suspected. However my stepdaughter (base rate tax payer) is about to come into circa 200k, but don’t worry we’ll see an IFA.

[OutInTheShed]

You can put in your allowance this year, which might not in itself gain you anything, but worst case you can take it out again.
Best case you leave some in there and then next year you've got a bigger tax free pot.

You can't look back and wish you put some in in a previous tax year.
You can't put in the max, take some out and then put it back in, in the same tax year (AIUI)

I used to put money into my ISA in March, when I was sure I didn't need it that tax year.

With a shares ISA, you not only save the tax, but also save a wad of paperwork compared with owning shares outside an ISA or SIPP.

[okgo]

ChevronB19 said:

Thanks all, much as I suspected. However my stepdaughter (base rate tax payer) is about to come into circa 200k, but don’t worry we’ll see an IFA.

She'll exceed her personal savings allowance with that amount in any account though, its 1k for basic rate tax payers isn't it?

[ChevronB19]

okgo said:

ChevronB19 said:

Thanks all, much as I suspected. However my stepdaughter (base rate tax payer) is about to come into circa 200k, but don’t worry we’ll see an IFA.

She'll exceed her personal savings allowance with that amount in any account though, its 1k for basic rate tax payers isn't it?

Absolutely. Yes it is 1k, I just need to know how we ‘alert’ HMRC to it, as it will be split over several ‘investments’, even if that is just three bank accounts to avoid the 85k liability limit, hence seeing an IFA.

[Simpo Two]

ChevronB19 said:

Thanks all, much as I suspected. However my stepdaughter (base rate tax payer) is about to come into circa 200k, but don’t worry we’ll see an IFA.

You can keep cash in a S&S ISA; that way you have other investment options in future too.

Make sure that if you hire an IFA you're not parting with £2K in fees for an hours' work.