Fixed Rate Savings Account

bigfreddiel

What you should do is this:

£15000 in a 3.1% instant access account now and add to it as and when

March 2012
£6000 in a 3yr fr bond
£6000 in a 2yr fr bond

April 2012
£6340 in a 5yr frisa from instant access account
keep saving to instant access account

April 2013
Use proceeds from 2yr bond for 5yr frisa
keep saving to instant access account

April 2014
Use proceeds from 3yr bond for 5yr frisa
keep saving to instant access account

simples

fj

Newly_retired

bigfreddiel, did you not see that OP does not want to be tied in for over a year?

alanq

bigfreddiel wrote: »

£6340 in a 5yr frisa from instant access account

The 2011-12 Cash ISA Allowance is £5340. Expect the 2012-13 Allowance to be about 5% more than that but not as much as £6340.

And as Newly retired points out the plan doesn't meet the OP's requirements anyway.

first_time_buyer_London

Im thinking of going for the skipton BS E Bond, fixed rate @ 3.45 Annual interest (as it looks higher than monthly interest)

Im just trying to work out the interest on £15,000 for 1 year @3.45 would be after tax?

The calculator on Money supermarket shows:

Tax free:£517.50
Basic tax rate:£403.65
High tax rate:£310.50
Additional tax rate:£258.75

Slightly confusing, for me anyway! does this mean I would clear £517.50?

Results from the money advice service calculator show:

£15414 Taxable £15517 tax free ?

"if your income is low you may be able to claim back some of this tax or ask to have your interest paid tax free!" Money Advice Service

Lets just say I'm un employed (& not paying tax) would I be able to apply to get the interest paid tax free?
I guess my question really is how (if possible) do I get the full interest tax free (apart from ISA's) ?

This is crazy!!!! having to pay 20% income tax on interest on your savings!!!!

Many thanks in advance

Sparky47

£15000 for 1 year at 3.45% interest is £517.50 before tax.
If you are a basic rate taxpayer then deduct 20% = £414

If you are a non taxpayer then send the Skipton form R85 and they will pay the interest without deducting tax. (available from the Skipton or HMRC site).

steady__eddie

"As it happens i've just opened a Skipton Ebond - paid using my debit card."

I also opened one of these this week using a cheque but still find myself unusually awash with liquid assets. I was thinking about topping it up but when I have transferred cash in the past by debit card, I am limited to £500. My bankers inform me that this is the limit.

first_time_buyer_London

Sparky47 wrote: »

£15000 for 1 year at 3.45% interest is £517.50 before tax.
If you are a basic rate taxpayer then deduct 20% = £414

If you are a non taxpayer then send the Skipton form R85 and they will pay the interest without deducting tax. (available from the Skipton or HMRC site).

Thank you Sparky47, So providing I fill out the Skimpton R85 form I will get paid £517.50 interest after 1 year then?

What would happen if I started working and paying tax within the year though for argument sake? would I still get the £517.50? or would they recalculate it?

In other words how would they know I have got another job and are working again unless I told them my circumstances had changed?

Many thanks

Sparky47

first_time_buyer_London wrote: »

What would happen if I started working and paying tax within the year though for argument sake? would I still get the £517.50? or would they recalculate it?

In other words how would they know I have got another job and are working again unless I told them my circumstances had changed?

Many thanks

It is up to you to notify your bank/building society if your circumstances change and you become a taxpayer.

See the declaration on a R85 form http://www.hmrc.gov.uk/forms/r85.pdf

pqrdef

Check out interest payment dates. For instance, interest paid on March 31 will be taxed according to your tax status in the 2011-12 tax year, but if no interest is paid until the anniversary date, the whole year's interest will be taxed according to your status in the 2012-13 tax year - it doesn't get divided between years pro-rata.

Monthly interest might be preferable.

bigfreddiel

Newly_retired wrote: »

bigfreddiel, did you not see that OP does not want to be tied in for over a year?

i did :-)

who knows he may have changed his mind now