best savings account - pensioner 30k

Checkov_2

My Dad aged 66 is retired doesn't have a huge pension, 5.5k a year. My mum age 61 is still in work and earns about 25k per annum.
My Dad recently received about 40k inheritance and is for the best interest account to put 30k of it in, doesn't mind leaving it alone for 5 years or so.
He is wondering whether he has to pay tax on the interest as well.

He banks coventry building society, and my mum nationwide if that's relevant.

Mikeyorks

Put the £30k in a term deposit for 6 months to 1 year (max) at circa 4.5% :

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

.... don't fix for longer at this point as interest rates are so low. So you review it after the end of the first fix. And, for what follows, make sure it's in his name and not joint .... otherwise 50% of the interest will be taxable because of your Mum's income. No point considering an ISA .... unless lots more inheritances are envisaged.

Can't fully answer the tax question as it's a bit unclear if the £5.5k is State or private pension (with a State pension on top?).

But on the assumption the £5.5k is State pension and his only income ..... there should be no tax due on the interest from the deposit. So he should file an R85 in order to get the interest paid gross. His Personal Allowance is £9030 (and increasing to £9490 from April ... which is the tax year when the first interest will be paid - unless he goes for monthly interest) So he can generate nearly £4k interest from it (we all wish!) - before breaching his Personal Allowance.