will paying off mortgage and saving with the money pay more tax

DOUGIE1

I currently owe £40,000 on my mortage with nine years left. However I have the £40,000 in the bank and I also save £250.00 a month regular. Could anyone tell me if I paid off the mortgage and then saved the £500 per month mortgage plus, my regular savings which would both equate to £9,000 per year in a savings account would I pay more tax as I am self employed on the lower tax level, or on a tax point of view is it best to keep the mortgage.

Lansdowne

Surely that depends on the interest you will be paying to keep the mortgage going, compared with the interest you will gain on the £40k over the same period.
You can invest in an ISA up to the limits and, if you want, National Savings certificates (index-linked maybe) that are tax-free up to their own limits.

sloughflint

Work out from your £40 000 saved:
(amount in ISA*ISA rate+ amount in taxed accounts*rate*0.8)/40000

If less than the mortgage rate then you are better off paying the mortgage off.

Primrose

With current savings interest rates forecast to drop to virtually zero over coming months, I would imagine you're paying a far higher interest rate on your mortgage, so it would make sense to pay at least a chunk of it off. As you're self employed you're probably not immune from the effects of the deepening recession so it would make good sense to keep between 3 - 6 months living expenses an easy access savings account in case your income is hit. You're already being taxed twice on your savings - once when you first earn it, and again on the interest you earn, so paying down part of your mortgage would make sense as I believe mortage tax relief no longer exists.