Savings for higher rate tax-payer, aside from ISAs!

irishwench69

Hi all,

I know this is probably repetitive - I did search and read the threads on NS&I and index linked bonds, but I wanted to post my own thread just to check things.......hope that's ok

My partner and I are on ok wages. He's a basic rate tax-payer, I'm higher-rate. We've both filled our ISA allowances for this year (08-09), and I've put 5k into a guaranteed saver, to take advantage of a good rate on a regular saver (both Halifax). Both my partner and I will fill the regular saver throughout the year.

With pension contributions, that should take care of ongoing monthly saving, but I wanted to ask about where would be best to add a lump sum, and any additional money I receive (e.g work bonus etc).

Being a higher-rate payer, it seems like the best rate would be the NS&I Index-linked Savings Certificates - is this correct? How does it work exactly - would it be ok to open with a certain sum (say 1-2k), then add any additional sums through the year, or is it only really good to open with a set sum?

http://www.nsandi.com/products/ilsc/rates.jsp

Also, how does it work with the issues of these? Is it only possible to open them at certain times throughout the year? Are the rates fixed per issue (at least in terms of how much above RPI they will be), or can this also fluctuate?

(One last point - I would look to pay some money off the mortgage, but we have a fixed deal, and no ability to make over-payments - we figure once the fixed bonds come to fruitition, we'll use the money then to make a lump overpayment before taking out a new / re-mortgage, except at a lower LTV!)

TIA!

IW x

StuartGMC

irishwench69 wrote: »

My partner and I are on ok wages. He's a basic rate tax-payer, I'm higher-rate. We've both filled our ISA allowances for this year (08-09), and I've put 5k into a guaranteed saver, to take advantage of a good rate on a regular saver (both Halifax). Both my partner and I will fill the regular saver throughout the year.

(One last point - I would look to pay some money off the mortgage, but we have a fixed deal, and no ability to make over-payments - we figure once the fixed bonds come to fruitition, we'll use the money then to make a lump overpayment before taking out a new / re-mortgage, except at a lower LTV!)

IW, just popping by from the Mortgage Free board; you don't mention your mortgage term, fixed deal time or capital outstanding.

Based on your joint income I would think you can make the extra money work well for you if you moved to offsetting your mortgage once your deal ends (both savings and current account e.g. NatWest, and also the Cash ISAs if necessary and you accept no growth for a while, e.g. Woolwich & First Direct).

Here your c/a and extra money will work very effectively for you as you are a higher rate tax payer. It may be worth looking at now to consider with the planning for investments in the interim - i.e. the period you want to tie up money for, plus you don't have to pay in the savings of course, let them offset and you gain the reduction in interest...
Our present equivalent mortgage interest rate is 2.75% :jand I use a spreadsheet to monitor spend, investments and offset position http://forums.moneysavingexpert.com/showthread.html?t=944413

HTH in the overall consideration of your investment portfolio?

RayWolfe

irishwench69 wrote: »

Also, how does it work with the issues of these? Is it only possible to open them at certain times throughout the year? Are the rates fixed per issue (at least in terms of how much above RPI they will be), or can this also fluctuate?

You can buy any amount between £100 - £15,000 and you may hold a maximum of £15,000 per issue. You can do this on line with debit card at any time day or night.
They have new issues - at different interest rates - very frequently; about 5 this year already. So it is easy to put quite a lot in. You can't add to an existing holding, you just take out a new one for any extra cash you have. They give you a certificate for each deposit.