Best way to save redunancy money?

jenmc84

Hi,

I have taken voluntary redundancy from the public sector and I will be getting a payout at the end of November. I am posting on this forum as I'm unsure of the best thing to do with my money. I have already read the redundancy guide but have some further queries.

I do not have a mortgage, and I am lucky enough to have parents that would support me, and a boyfriend that allows me to stay with him pretty much rent-free.

I would like to use as little of my redundancy money as possible, and will of course be intending on getting another job as soon as possible! I want to use as much money as possible to put towards a deposit on a house.

I obviously want to ensure I can access some of the money, and I initally intended on putting the remaining balance from my redundancy into a savings account once I've used up my ISA allowance as I want to keep it separate from my current account and I'd like it to work for me, but I have read that I get taxed on any savings. My redundancy money will be tax-free, but will I be taxed on it if I put it in a savings account? I'm planning on paying myself a small monthly salary into my current account.

Thanks in advance to anyone that can help.
Jen

atush

did you have a pension with your PS employment? how many years if FS?

I do not have a mortgage, and I am lucky enough to have parents that would support me, and a boyfriend that allows me to stay with him pretty much rent-free.

Not liking this as a life strategy- this is how women end up penniless by relying on the kindness of others. Esp boyfriends who aren't husbands. You need to be able to earn enough to stand on your own two feet. He could leave you tomorrow and they could lose their money to a scammer or something else equally catestrophic.

How long will it take you to find another job? Did you have to take voluntary redundancy? Can you change your mind? Have you go a job already?

Ark_Welder

jenmc84 wrote: »

My redundancy money will be tax-free, but will I be taxed on it if I put it in a savings account?

The interest earned on it will be subject to tax outside an ISA - if your total taxable earnings in the tax year exceeds your personal allowances - but the capital itself will not be taxed.

jenmc84

atush wrote: »

Not liking this as a life strategy- this is how women end up penniless by relying on the kindness of others. Esp boyfriends who aren't husbands. You need to be able to earn enough to stand on your own two feet. He could leave you tomorrow and they could lose their money to a scammer or something else equally catestrophic.

How long will it take you to find another job? Did you have to take voluntary redundancy? Can you change your mind? Have you go a job already?

I'm don't think that that comment is too helpful - it's not that I can't support myself, I'm very very lucky in that I don't have to at this time. And it's nothing to do with the fact that I'm a woman! It's not a life strategy, it's the way my life is at the moment at the age of 27. Not many people can go into redundancy with such little worries (I took voluntary only as a way to know the outcome - I would have been made redundant either way).

I asked an innocent question and didn't expect to have the way I live analysed.

Not too sure what kind of a life you live thinking my partner could lose his money to a scammer!

jenmc84

Ark_Welder wrote: »

The interest earned on it will be subject to tax outside an ISA - if your total taxable earnings in the tax year exceeds your personal allowances - but the capital itself will not be taxed.

Thanks very much for this helpful reply, this was exactly what I was looking for.

atush

I was making a point that relying on others is one way to be let down badly. you are convinced that won't happen to you so good luck with that. I certainly hope for you that is always the case, just pointing out the pitfalls. But you could have answered the questions so as to help others help you better. Particularly as regards your pension situation and if you HAD to take redundancy. I only rec taking vol. red. if you already have other employment lined up.

As for tax, we aren't sure what your tax position is as regards your income this year. But next tax year if you aren't already working the savings brought by your redundancy might not be over your personal allowance. NSI ILC would have been a great bet for you but they have been withdrawn as of last week. If they offer them again early next year grab it up as this shelters you from tax as well as inflation. If you have to rely on Bank savings rates, your redundancy pot will be losing ground against inflation while also attracting tax on the interest.