£8,000 for a year?

wrexhamandy

Hey everyone, I have £8000 available for one year (interest free Career Development Loan), what would be the best savings/investment for the highest return? Risk is okay as long as I can definitely pay off the £8000 in a year.

I don't pay any tax (sorry, scummy student ) and I don't require any access to the money (in fact I'd rather I couldn't access it at all to avoid temptation).

I'm thinking £3000 in an ISA - the NS&I one seems to be the best for that from what I've read on the forum; and £5000 in a savings account - the ICICI hi-saver one seems the best in this regards.

So yeah what do you clever beautiful people think? Does the fact that I don't need/want access mean there's anything better?


Cheers,

Andy

MPH80

wrexhamandy wrote:

Risk is okay as long as I can definitely pay off the £8000 in a year.

Erm - then risk isn't ok. Any risk means possibly losing some or all of the money.

I'm thinking £3000 in an ISA - the NS&I one seems to be the best for that from what I've read on the forum; and £5000 in a savings account - the ICICI hi-saver one seems the best in this regards.

No point bothering with the ISA if you don't pay tax. If you use the ICICI you'll get 5.15% on all the money providing you register for gross interest. Just seek out the highest interest rate you can find.

mexicanwaver

I'm pretty sure that you have to pay tax on any earnings over £4800 per year (or something like that)........regardless of whether you're a student or not.

You'd have to check out the exact facts from the inland revenue website.

Mikeyorks

wrexhamandy wrote:

So yeah what do you clever beautiful people think?

...... that flattery's not your strong point:rolleyes: ....but you're basically on the mark as to where you should put your money (ISA / Savings account) .. as (post #2 is right), you're not in a position to take risk.

I'd give it a further week for interest rates to rationalise, after the BofE base rate rise - then do a bit more research from the 'Savings & Investments' link on the left of your 1st post. And choose the best ISA for £3k and the best Savings account for the rest. Except .. if the Savings rate is better than the best ISA rate .. put the lot in the former. But make sure you file an R85 with it, to get gross interest paid (whether it finishes with £5k or £8k in it).

One option - if the ISA rate is beneficial, is to put a further £3k in immediately after 6th Apr 2007.

But - whichever way you slice the cake - make sure the products you get into are readily translateable into liquid funds in 12mths time i.e no tie ins / penalties / 1 year bonuses etc.

wrexhamandy

Sorry, I meant 'risk' in a non-technical sense in that I'm willing to 'risk' making no profit (a la Premium Bonds) if there is a chance of a much higher return.

MPH80, thanks but aren't I right in thinking it would still be worth bothering with an ISA, even if I don't pay tax, if the rate is higher than a savings account - such as the NS&I ISA at 5.30% being higher than the 5.15% ICICI savings account you mentioned?

And yeah thanks mexicanwaiver I didn't think I'd still have to pay tax if I'm over the threshold, it's not being a student per se that gets you tax-free is it but the fact most students never reach that earning threshold. Would the 'earnings' be calculated on the total put in (i.e. £8000) or just any profits from that (i.e. the couple of hundred I guess I'd get in the tax year)?Would it be capital gains tax? My tax-knowledge is laughable I'm afraid.

Anyway thanks for the responses and advice ,

Andy

cupid_s

I am sure it's the being the student that gets you the tax-free benefit. I am a student but get over the threshold of £4800 per year but still pay no tax or national insurance on any of my money.
I am pretty sure that if you are a full time student you pay no tax regardless of what you earn.
Otherwise postgrad student salaries would be subject to tax wouldn't they?

chesky369

Post graduate student salaries ARE subject to tax, if they're over the threshold. It's not really how you get your money that counts, it's the amount you get in any tax year.

chesky369

Having said that, grants, scholarships and bursaries are NOT subject to tax.

jimclark1967

cupid_stunt wrote:

I am sure it's the being the student that gets you the tax-free benefit. I am a student but get over the threshold of £4800 per year but still pay no tax or national insurance on any of my money.
I am pretty sure that if you are a full time student you pay no tax regardless of what you earn.
Otherwise postgrad student salaries would be subject to tax wouldn't they?

Any UK employment income by anyone (babies, children, adults..) is subject to UK income tax. The first £5,035 is not taxed and the next £2,150 is only taxed at 10%. After that it's basic rate 22% (20% on savings interest) unless you're lucky enough to trouble the higher rate band.

Students are not exempt under any circumstances, but bursaries / scholarship income is exempt, this being why you are not paying tax as a funded postgrad.

To clarify, it would only be the interest on the £8,000 that would be taxed if not covered by the personal allowance.

JC