Best savings account for someone who doesn't pay tax?

Nine_Lives

It seems my mother doesn't need to pay tax.

Have followed the advice of you guys & checked links & i think she doesn't have to. Just waiting on someone reading the update in the other thread to say whether they reckon the same or not.


So, if she doesn't need to, then ISAs aren't for her at the moment if i understand correctly & she'll get the gross on any savings account.

In this case, what savings account/s would you recommend for her?

I think she currently has 2.5k in Nationwide Flex Account, 5k in an ISA (i think), and "some" in her LLoyds TSB account - don't know how much yet.

Although her income is low, if anything needs to be cycled to hit targets, then i can help her with that, so that's not a problem.

Help appreciated.

Eco_Miser

K_P83 wrote: »

It seems my mother doesn't need to pay tax.

So, if she doesn't need to, then ISAs aren't for her at the moment if i understand correctly & she'll get the gross on any savings account.

If she asks for it, using form R85.
While generally ISAs aren't appropriate for non-tax payers, there are some occasions when they are.
1) If she's likely to be a tax payer in the future, it may be worth hanging on to any existing ISAs she's got, for the future tax-savings.
2) If her gross taxable income is near the personal allowance, using ISAs can keep it below the limit, by taking some income right out of the tax system.

Nine_Lives

That's unlikely at the moment.

She's been out of work & on these benefits since 2003 due to a few injuries/medical conditions etc, so there's no sign of her having to start work any time soon.

Also, as i say (or maybe is aid in the other thread?), her taxable income is about 4k so still a bit off the limit, so she's fine there.



I was taking a stab at the Lloyds Vantage account, but then i realised - the 1k per month criteria.

I could help her with this, but then, i am guessing the 1k each month (even though the next day it'll be back out of her account & back into mine) will be seen as a taxable income - which obviously totals 12k. Add to this her current taxable income of 4k making 16k & that sends her way over the limit.

Or would the 1k from me not be seen as 'taxable income'?

Or is there a better account out there other than Lloyds Vantage for this situation?

Eco_Miser

The £1k from you I would say is a capital transfer, not income. She could transfer £1K out to her current account, then back in, no need to involve you at all. Using faster payments it all hapens in 1 day so no interest lost. See other threads for many examples.
Alliance & Leicester's Pemier Direct Current Account pays 5% gross on the first £2500, with a £500 pm funding requirement, and hassle downgrading/upgrading every 12 months. Avoid the similar sounding Premier 50 Current Acount. Vantage may be better overall.

scottishblondie

I use a Lloyds Vantage as my main savings account (also a non tax-payer), the 1k funding requirement could be satisfied by your Mum moving 1k into (e.g.) a Halifax reward account then back to Lloyds. This can be accomplished online in a few minutes and would get her around £21 a month in interest from Lloyds plus £5 from Halifax, assumming she keeps the Vantage balance at 7k.

I also have an A&L Premier Direct account, which I fund with the £500 a month to build towards the optimal balance of £2500, but the fact that it has an underfunding charge and limits faster payments to £250 makes it a less attractive option to me than the Vantage, despite the higher interest rate (I got one at 6%, which I have to admit is nice!).

Consider all the options carefully before she takes money out of her ISA, as Eco Miser makes 2 very good points. Despite not being a tax payer for the last 3 years I have retained my ISAs as I knew I would have to pay tax again one day. Also remember that the Vantage interest rate is not fixed, and although it has remained the same for quite some time now there is always the possibility that it could change.

Nine_Lives

I read on here that you can make you Lloyds account "Vantage" online (as well as over the phone etc etc).

Mums online TSB details came through yesterday & she's just got a standard savings account.

How (online) do i turn her account into a Classic Vantage account?

Nine_Lives

What? Stocks? No, it's just a good quality bank account she's after

And now i'm wanting to know how to turn her account into a Vantage one online.

scottishblondie

If it is a savings account she can't add Vantage to it, only current accounts can have Vantage added to them. She will need to apply for a current account with Vantage, either online, by phone or in a branch.