Any better instant access than Tesco 1.35% ?

Yes - you can make a contribution to a personal pension or a self-invested personal pension (sipp) of some minimum allowance, even if you don't have any income.

You can put £2880 into a pension in any one tax year and the pension provider will go and claim some cash from HMRC, leaving you £3600 in the pension. What you put in is 80% of the £3600 that will be sitting in the pension, so you have effectively got 20% tax relief (£720) on the £3600 asset that you now own, even though you might not even have paid £720 in taxes this year.

Then later when you come to cash out your pension (which should grow over time from £3600 to something bigger), you should be able to get the first 25% of it as a tax free lump sum and only pay your marginal rate of tax (e.g. 20%) on 75% of it.

Using this method the free money you get from the taxman on your contributions should be less than the tax you pay when taking it back.

Consumerist wrote: »

This thread started out quite disappointingly but it's definitely getting more interesting.

The threads with people wondering if they can do better than a percent on their accounts are always a bit boring because there's about a billion threads talking about how you can get over 3% on 40k+ using current accounts ; and even the Savings page on the main site tells you you should consider current accounts, highlighting that you can park £20k per Santander account x2 accounts as a substitute for instant access savings.

Think I'll investigate the personal pension or SIPP a bit more thoroughly. Any pointers you can offer, please?

SIPP is self invested personal pension plan, most fund supermarkets allow you to set them up, with a wide variety of fee structures. Most people don't need SIPPs because they don't need to construct their own heavily tailored portfolio out of 30,000 individual investment options the world over. Still, many people set one up because they have heard about them in the media and then end up spending more money than they need for something quite basic.

If you just need to park £2-3k a year like Carolinemjs might, you can get a simple personal pension with a whole bunch of fund choices from one of several mainstream pension houses. You can check their websites direct to see what sort of thing they offer, but if you don't have an advisor you may save some money by accessing them through Cavendish Online who will get you in at a discounted price. The pension and fund management fee combined will be less than a percent of your pot per year and the percentage will go down if you have enough assets to reach various thresholds of funds under management.

Of course, this is nothing to do with the OP's question about alternatives for a Tesco 1.35% instant access savings account... so once you've researched pensions and investments more, if you read a bunch of threads here and on the Pensions forum and don't find the answers you need, set up a new thread with your questions and you'll get better responses.