Best savings account?, Saving avg. £500 per month.

dark_stranger

Hi Guys & girls, I am looking for the best saving account. I am currently self employed as an IT contractor and will be paying my corporation tax, etc at the end of the year. I will on avg be saving £500 per month & will be looking at keeping these saving until my taxes are due, 1 years time. What can you guys/girls advice? As well as my tax money I plan to put some personal saving in the account to withdraw when required'ish (30 day notice)? Would it be better to have to seperate accounts?

Thanks,

cadboll

Hi.

There are a number of options available though I'm unsure how they applicable they are due to your self employed status.

1. If you haven't made use of your ISA allowance of £3,000 - that would be the best place to start. It allows you to get interest on that amount tax free!

2. If this isn't an option, you could use one of the many online savers accounts such as A&L, Nationwide, First Direct, ING etc.

3. You could also consider using a regular savers account - Halifax have one - 7% Gross/AER you have to put between £10 and £250 a month (from memory!!). A&L also have one - 10% Gross/AER - I haven't read the T&C on it though and its only available if you don't have a current account with them at present.

A combination of one or all of the above may prove useful to you. In any case the best thing to do is get it into as high an interest account as possible and keep an eye on the rates so that if one drops you immediately can shift it to another account.

Hope this helps.

Limes

cadboll wrote:

3. You could also consider using a regular savers account - Halifax have one - 7% Gross/AER you have to put between £10 and £250 a month (from memory!!). A&L also have one - 10% Gross/AER - I haven't read the T&C on it though and its only available if you don't have a current account with them at present.


Hope this helps.

Halifax is a 1 year bond with interest payable on maturity and a maximum investment of £3,000. There are no withdrawals allowed with the penalty being that the rate reverts to Hali's online saver if you do withdraw. The balance is transferred on maturity to a nominated instant access account.

A&L 10% account is subject to opening a new current account with them and paying salary into it. It is also a 1 year bond with interest paid on maturity. Again a maximum balance of £3,000 with the account being closed if a withdrawal is made.

If you've used up your ISA allowance makes sense to pay into a good rate paying instant access account as there is very little difference these days between them and some of the notice accounts if penalties on certain instant access accounts are taken into consideration. They're low risk and a good return can be made, just watch out for the withdrawal conditions though!!!

ING is always a good bet. Not the highest rate out there but a good solid performer!

Stonk

dark_stranger wrote:

Hi Guys & girls, I am looking for the best saving account. I am currently self employed as an IT contractor and will be paying my corporation tax, etc at the end of the year. I will on avg be saving £500 per month & will be looking at keeping these saving until my taxes are due, 1 years time. What can you guys/girls advice? As well as my tax money I plan to put some personal saving in the account to withdraw when required'ish (30 day notice)? Would it be better to have to seperate accounts?

Thanks,

Are you running as a Ltd Company? If so, some words (well, paragraphs) of warning. I'm not sure, but some of this may also apply if you have a different setup.

You cannot deposit your Ltd Company's money in a personal savings account. When you open a personal savings account, the T&Cs will insist that the money belongs to you. It is important to make the distinction that your company's funds are NOT your personal money.

In order for that money to become yours, you have to formally draw it as salary or dividend (which both involve paying personal income tax, and, for the former, NICs too). You cannot just transfer money between your personal account and your company account at will. Well, you can, but it has taxation consequences, e.g., from it being considered a interest-free loan. My accountants used to let their contractors mix up personal and business money a bit, but they have had an increasing number of tricky enquiries from the Revenue and so they have clamped down on it.

It's all very annoying, because you typically get atrocious interest on your company money until there is quite a lot of it - by which time you probably want to draw it out anyway.