ISA's and Income Tax

[chirpychippy]

Hi all, I am looking at taking out an ISA, I was just wondering whether the 20% Iput away to pay my tax bill at the end of the year would better served being paid into my ISA along with my monthly instalments. The 20% income tax sits in a current account and earns next to no interest over the course of a year. Does anybody know if this is possible as I would have to withdraw a large sum when my Tax bill does land on my doorstep.

Thank you in advance

 

[foxhole]

Most cash isa's allow unlimited withdrawal, but you cannot replace money once removed.So ideal to save you tax payment, why not ask to pay in installments that way you hang on to the money longer and get more interest.

 

[longdogs]

My ISA has about two quid in it

 

[JohnD]

National Savings have an ISA that currently pays 1.5%, which is not much, but you will be lucky to get more. Can be operated online to take money from, or put it into, your bank account. You can open a new account, but they do not accept transfers-in from other ISAs.

This is the standard rate, there is no bait-and-switch to trick you with a temporary bonus.

This year the max limit for an ISA is £15,240

Premium Bond prizes are also free of income tax. Perhaps you will be lucky. You can now put in up to £40,000.

 

[tony1851]

H I would have to withdraw a large sum when my Tax bill does land on my doorstep.

Show-off!........

 

[big-all]

assuming your annual tax bill is 15k and you save up over the year
you will then save over an average 11 months and roughly half the 15k on average so 7.5k for 11 months now lets assume you can get 1.2% apr
so 7500+1.2= £90 gained divided by 12=£7.50x 11=£82.50

so yes worth the effort if its minimal effort and you have no money to save tax free that will compete for your allowance

 

[Jackrae]

Why not buy premium bonds each month. The cash-in period only takes a couple of days and there's always a remote chance of "getting even" with the tax man

edit: just seen that's already been suggested