ISA question for short term savings

[somuchbedding]

I am currently saving for some bits needing doing around the house. It’s just sitting in my current account and it accumulates each month.
Should I add it to my ISA & take it out as needed? I have never taken any money out of an ISA so unsure how that works or any potential implications. Just seems silly to have 7k sitting there.

Just put it in a cash isa that allows you to withdraw from without notice or penalties. You won’t get a lot in interest unless you don’t touch it for a while but you’ll get a bit more that having it sit in your current account.

@Notmyreality thanks. I only have a S&S ISA, is a cash ISA a better option?

Do you have other cash savings or are you a higher/additional rate tax payer?

A basic rate tax payer can earn £1,000pa interest at 0% tax (higher rate £500, additional rate £0).

£7k would earn £280pa at 4%.

You may be just as well putting it in the highest rate instant access you can find and not bothering with and ISA for this short term cash. But it depends on your overall tax position, and the rates you could get.

@Chasingsquirrels No other cash savings in my name and not a higher rate tax payer as I’m p/t.

I will have a look at instant access accounts & see what the rates are like.

Definitely don't put it in S&S if you have plans for it.

Given you won't earn enough to pay tax on your interest, it doesn't need an ISA wrapper. Look for a decent interest rate, easy access account. That might be a cash isa, but might well not.

Thanks for your help

Just remembered I also have PBs, I could put it in there?

Open an NS&I instant access saver. The interest rate is 3.5% and you can withdraw money whenever you want. PBs won't necessarily give you the return your looking for - you might only win a £25.

A cash ISA will give you what you need as long as it is a Flexible ISA. I have one with Chip which I use for “day to day” savings currently at 3.55% tax free. Withdrawals and deposits happen instantly (not all do so check if that’s important to you). For me it is as this is where I transfer most of my short-term savings, then withdraw it to my current account as I need to.

You want at least 4%, preferably a bit more.

If you don't already have a Chase account, you can open a current account with them (which you don't have to use - I don't) which gives you access to their savings account which currently has a 1 year bonus giving a 4.5% rate (variable).

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The best (and probably safest) place to get advice is from Martin Lewis. His guide to the best savings accounts is here. https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

Chase currently offers the best rate for easy access. With £7k in there you won't exceed your savings allowance so no tax to pay.