best account for £18k lump sum

m567

hello,
i am about to move to london from overseas. I already have a regular current account with Natwest, empty. i think it pays 0.1% per month...

i will bring a £18k lump sum, and i estimate my net salary will be around £3700/m (40% taxpayer). i read the "best bank accounts" item as well as the "regular savings accounts" one...

considering that i will live in london only from before new year,
which is the best account to put the lump sum in and at the same time pay in my salary?

with these figures, is it better to split the lump sum over several accounts?

regards,

jem16

m567 wrote: »

considering that i will live in london only from before new year,which is the best account to put the lump sum in and at the same time pay in my salary?

Very unlikely that you would use just one account. Your salary would normally be paid into a current account which would be your day to day running account. Your lump sum should be paid into a savings account.

with these figures, is it better to split the lump sum over several accounts?

No need - you are well below the £35k compensation limit. One account will suffice.

Your first account to open will be a cash ISA where you can put in £3,600 and gain tax-free interest. This is very important as you will be a higher rate taxpayer and are going to lose 40% of your interest to the taxman.

After that it depends on whether you need access to the rest of the lump sum or can tie it up. If you can tie it up NS&I offer tax-free index linked savings certificates which are good for higher rate taxpayers. You need to be able to leave it there for at least a year.

If instant access find the top paying high interest accounts such as Kaupthing Edge paying 6.55%.

Steve_xx

You may also wish to look at ICICI Banks' 1 year bond paying 7.2%

https://www.icicibank.co.uk/hisave_fixedrate.html

m567

thank you,
so for cash over the £3600, i should compare:

kaupthing (6.55% -> 3.93% after tax) - instant access
ICCI (7.2% -> 4.32% after tax) - tied up 1 year
with
NS&I tax-free index linked savings certificates - tied up 1 year

what sort of yield should i expect for the NS&I certificate?

cheers,

Steve_xx

m567 wrote: »

what sort of yield should i expect for the NS&I certificate?

cheers,

With NSI Index-linked certficates you will get 1% + the RPI. The 1% portion is fixed, but the RPI portion is variable and is currently at around 4.1&. RPI is on the rise at the moment and this makes these certificates particulalry attractive to higher rate tax payers

m567

Apparently, from
http://www.nsandi.com/products/ilsc/index.jsp
the Index-linked Savings Certificates Investment term is 3years min and is maxed at £15000.

Jonbvn

m567 wrote: »

Apparently, from
http://www.nsandi.com/products/ilsc/index.jsp
the Index-linked Savings Certificates Investment term is 3years min and is maxed at £15000.

These certs have to be held for a minimum of 1 yr to get any interest.

Normally, certs are issued a couple of times a year and yopu can put 15k into each issue. You can rollover maturing certs and still invest in a new issue.

A no brainer for a high rate tax-payer.

m567

Thanks... will do.
i have a current account with natwest. Is their cash ISA is the best given that I'll not be transfering from another ISA provider?
cheers,

jem16

m567 wrote: »

Thanks... will do.
i have a current account with natwest. Is their cash ISA is the best given that I'll not be transfering from another ISA provider?
cheers,

No you only get the bonus if you are transferring. Others pay more for new money.

m567

hi,
1) which cash isa gives the best rate now?
2) I understand NS&I have changed their rates recently?
Are they still the best for a higher rate taxpayer?

cheers,

f_@_w_y

Has anyone seen this http://www.unbankltd.com

They also pay 7% AER, based in london... regulated by FSA

Strange, I never heard of it....