GOT A CASH ISA? You should probably ditch it!

With the Personal Savings Allowance, for most of us money isn't nicer in an ISA

- MARTIN LEWIS

Press the rewind button and go way back - before COVID, before Brexit - to April 2015, then picture a devastatingly handsome man at home, on the sofa, talking about money with his wife. Well, he has nowt to do with this, but possibly on the telly in the corner, I was on-air at the time urging savers as usual to use their new tax-free cash ISA allowance - because 'money was nicer in an ISA'.

Everything changed though in 2016, when the Personal Savings Allowance (PSA) launched. It means:

Basic 20% rate taxpayers can earn up to £1,000 interest a year from any and all savings without paying any tax on it; after that their interest is taxed at 20%.

Higher 40% rate taxpayers can earn up to £500 a year; after that their interest is taxed at 40%.

Top 45% taxpayers don't get a PSAall their interest is taxed at 45%.

This is a huge amount of tax-free interest for most people. Even at today's stand-out top easy-access 1.5% rate from app-only 'Cash have to hav intere: bank chase.co.uk, you'd need nearly 70 grand saved to generate £1,000 interest. Which is why the vast majority of people - over 19 in 20 - don't pay tax on savings interest any more.

All a cash ISA is, is a savings account you don't pay tax on.

Focus on the interest rate