“What happens when I have filled my cash ISA?” This is a question I get asked A LOT. Someone got in touch via Instagram this week asking for a solution. Their ISA was full and not returning very much in interest.
What is an ISA?
So first thing’s first! What is an ISA? You can pay in £15,250 into an ISA this tax year. You can use this allowance 100% towards a cash ISA, a stocks and shares ISA, or a combination of the two. The main benefit of an ISA is that any growth or interest that you get is tax-free.
Is your ISA any good?
Is your ISA any good? Check the interest rate and shop around. Take a look at comparison sites to see if you can get a better rate outside an ISA.
A lot of people seem to have missed the news about the Personal Savings Allowance. It was introduced in April 2016 and you are allowed to make £1000 per annum in interest if you are a basic rate tax payer before you pay tax. If you are a high rate tax payer this is reduced to £500. If you earn over £150,000 you don’t get an allowance.
So with most savings accounts paying less than 1%, you would need to have £100,000 in cash as a basic rate tax payer or £50,000 for a higher rate tax before you paid any tax.
What’s the point of a cash ISA?
So what’s the point of a Cash ISA? I agree. When a client comes to me for advice, I tend to use their ISA allowance now for investing i.e. stocks and shares ISA.
Finally, don’t forget to work out if you have too much cash!! Are you saving into cash for the wrong reasons?
Hope this helps. Any other questions let me know.
Lots of Love
Miss Lolly xx
p.s. It used to be that banks taxed everyone automatically at 20% on their savings before they gave the interest to you. Now banks are paying interest gross – i.e. without tax.
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