On the Intelligent Finance website http://www.if.com/savings/minicashisa.asp it suggests that if you have an offset mortgage you could offset your mini ISA against it, to reduce the repayment period.

Err.. I thought an ISA was tax-free. If so, wouldn't you be wasting the tax-free benefit by off-setting it against your mortgage? I can see there might not be much net difference, since the mortgage interest rate is much better than the saving interest rates in general, and the latter gets taxed, but say you had two lots of £3k to save. The ISA should be separate from the mortgage, surely, to benefit from the tax exemption.

thanks for that

enforcer - it makes no difference, as the return on savings is essentially tax free on an offset mortgage anyway (ie it actually returns you what you would have paid on the mortgage - tax doesn't come into it - you get 0% on savings and pay 0% on the corresponding amount of mortgage)

The only time you WOULDN'T offset your ISA against your mortgage is if the gross rate on the ISA is higher than the mortgage interest rate.

Yes, but what about my other point? If you save £3k in a normal savings account, and call that your ISA, you get tax relief on it. Set up another (non-ISA) £3k against your mortgage, and get no tax on that either. So that's £6k invested tax free.

To set up an ISA specifically offset against your mortgage removes that advantage. No?