What do I do with £7.500

barnesfamily_2

Hi there.The story is that a few months ago we aplied for a working tax credit and other and we only just got paid all of them as a back payment of 7.500.We rent at the moment and can`t get a house just yet so I would like to save the money in some way.Is it possible that I put them in an account that I don`t have to pay tax on them?I don`t really know what to do?Thank you in advance
Sasha

Stubod

Tax free means you will need an ISA,

Alternatively good old Llloyds vantage account paying 4% on a sum of between £5k and £7k...BUT you will need to "take out" , and "put back in" £1,000 every month.

Whether you pay tax on this 4% will depend on what rate of taxpayer you are...

Stu

CLAPTON

you can save 5,100 per tax year in a savings ISA on which no tax is deducted; so you could put 5,100 in an ISA now and the remaining after 6th april
or if you are a couple then both have the ISA allowance

if you don't work (or earn less than 6475) then you can put the money in any saving a/c and fill in a R85 form so there is no interest deducted.

Stubod

Best general ISA is nationwide (2.9%) - Online
Next best is Santander - (2.88%) - BNranch / post etc..but bear in mind that Santander customer service is on par witha chocolate tea pot.
Or if you can put away for 2 yeras, then Halifax pays 3.5%

..the choice is yours...


Stu

barnesfamily_2

Thank you to both of you.I am a stay at home mum at the moment so can I still have an ISA?
Stubod,we are banking with Lloyds now,so can I just go and ask how to open that vantage account or there is something else to it?

Stubod

Hi there,

..if you are already with Lloyds just ask them to change your current account to a "vantage" (at lkeast I think thats right). Its a current account that pays up to 4% interst per month as long as you maintain between 5k and 7k..(NB Anything over 7k gets nothing). The only "down" sdie is that you have to put in £1,000 every month..but there is nothing stopping you taking it out of the same account, then putting it straight back in....som eof the "experts" on this site actually have 3 of these account srunning at the samer time.

If you go into Lloyds just ask them for the 4% current account, and I am sure they will set it up for you...

Stu

Stubod

nb ref ISA, these are issued "per person" I beleive....ie anybody can take one out up to £5,100 per year (cash ISA)..so yes you can take one out regardless of where you are currently living....

Stu

bendix

£7.50?

I wouldn't bother. I'd go out and buy a couple of pints of milk, a newspaper, a pound of bananas and treat myself to one of those £1 bars of Galaxy.

You're welcome.

barnesfamily_2

Bendix I mean 7500

Careful_ly

I think the Lloyds Vantage is a good idea, but I would open a seperate account in your name only.

The reason for my suggestion is because you are a non taxpayer you can complete a R85 and get the 4% paid gross, if the account is in joint names your partners half of the interest would be taxed.

I also think it would be good to keep it apart from your daily cash and see it as a savings account. You will have to put £1,000 per month as already explained.

Do you have any loans/credit cards charging interest, it is not worth earning 4% if you are being charged higher interest elsewhere?

HTH

calypso_rhapsody

No point in an ISA if you are not a basic rate tax payer.

Lloyds Vantage is probably the best deal - you will earn 4% on balances between £5k and £7k but nothing over £7k so put the £500 somewhere else. The £1k in each month can be a standing order out and back in on the same day (provided it is into or out of somewhere that will do same day transfer - another Lloyds account is ideal). Also interest is credited every month but is not compounded if your balance is £7k - so move that somewhere else too ...