Best place fo saving 20K tax free for a year

pauljoecoe

I have 20k which has been in an account in my daughters name for a while. she is 17 and it is for university that we have been saving this money.

So i need to save it for one more year. As she is under 18 but over 16 many accounts are not available to her.

I could put it in my offset mortgage with First Direct which will give the equivalent of 2.59% tax free.

If there a better route than this?

Jake'sGran

Northern Rock are offering 3.17% but it is fixed until early Jan 2012. Yorkshire BS are paying 3% also fixed until Dec 2011. You could have an ISA in your name but the max is £5100.00 in cash (out of a total allowance of £10200) and the rates are not as good as non-Isa savings.

At the top of this page, if you click on Banking/Saving you will find the best rates on savings A/cs. I believe there are some student savings A/cs. They might have better rates but not likely to beat N.Rock.

Lokolo

As she's not going to need the whole lot straight away, have you thought about splitting it up and putting it into fixed accounts 1/2/3 year?

So £20k over 3 years is around £6k a year +2k spare.

She could have £6k in a 1 year fix at 2%, £6k in a 2 year fix at 3.3% and £8k in a 3 year fix at 3.8%, all in her name. If she is not a taxpayer she can also phone up Halifax and get her interest paid gross.

http://www.halifax.co.uk/savings/accounts/longer-term/fixed-rate-websaver/

The money then matures 6 months before she needs it.