Seeking some expert advice please.

hotrocks68

Hi everyone,

I'm thinking of cashing in my 30k of premium bonds because it might be easier to manage and move the money if its in my bank account,and besides,i never win hardly anything.
I have a Lloyds Tsb online account and so......
i'm thinking of putting the allowed £5,340 into a variable cash isa saver which will give 2.35% interest....
the remaining £24,660 i was thinking of putting into the esaver account which would give 2.50%
The rates are not great but i can manage it all online and shuffle it into my classic account when needed.
Obviously the isa is tax free,but the money i would make on the savings account(over £600?),do i have to write and tell the tax man that i've recieved £600 in interest?

Thankyou all.

mgarl10024

hotrocks68 wrote: »

i'm thinking of putting the allowed £5,340 into a variable cash isa saver which will give 2.35% interest....

Two things spring to mind
1) 2.35% doesn't sound great. Look at http://www.moneysavingexpert.com/savings/best-cash-isa
If you are prepared to lock it away, then you can get better rates
2) You could pay in £5340 now (before April 5th I think), then the new limit after - getting nearly £11k in there.

Linton

You dont need to write to the taxman. You will have to declare any non-ISA interest received as part of the income section of your annual tax return should you be asked to fill one in.

Standard rate tax is automatically deducted by the bank before payment unless you explicitly ask for interest to be paid gross.

hotrocks68

Linton wrote: »

You dont need to write to the taxman. You will have to declare any non-ISA interest received as part of the income section of your annual tax return should you be asked to fill one in.

Standard rate tax is automatically deducted by the bank before payment unless you explicitly ask for interest to be paid gross.

Thankyou...

I am currently not working and dont fill in a tax form or anything.I just spoke to Lloyds and they said that i dont need to do anything and that the tax is deducted by them.
I just think i can get more interest from the 30k rather than leave it in premium bonds.

Linton

hotrocks68 wrote: »

Thankyou...

I am currently not working and dont fill in a tax form or anything.I just spoke to Lloyds and they said that i dont need to do anything and that the tax is deducted by them.
I just think i can get more interest from the 30k rather than leave it in premium bonds.

If you believe your total income in a tax year will be below the allowance you need to ask your bank to pay interest gross - otherwise its a minor hassle to get the tax refunded from HMRC.

As to premium bonds - it would be a poor savings account that paid less than the average premium bond return.

hotrocks68

As to premium bonds - it would be a poor savings account that paid less than the average premium bond return.[/QUOTE]


Ok ty again...............but now thats got me thinking i'm better of leaving the 30k in premium bonds!!:o

Newly_retired

You can download and R85 form from hmrc website so you can get the interest paid gross ie not taxed. Then complete it and take it into your branch or post it to the bank.
You can get better rates elsewhere than LloydsTSB for your ISA and for instant access accounts.

psychic_teabag

hotrocks68 wrote: »

I have a Lloyds Tsb online account and so......
i'm thinking of putting the allowed £5,340 into a variable cash isa saver which will give 2.35% interest....
the remaining £24,660 i was thinking of putting into the esaver account which would give 2.50%
The rates are not great but i can manage it all online and shuffle it into my classic account when needed.

if you ask for the "vantage" feature on your classic current account, they'll give you 3% interest on balances of 3-5k. And I believe you can still have 3 of them, so could get 3% on £15k staying within Lloyds.

With that much in instant-access, you shouldn't really need to dip into your ISA, so there's not a particularly strong case for settling for Lloyds interest rate.

gadgetmind

hotrocks68 wrote: »

I'm thinking of cashing in my 30k of premium bonds because it might be easier to manage and move the money if its in my bank account,and besides,i never win hardly anything.

Another option is to wait and see if NS&I have a new issue of index linked bonds in the summer. If they do, you can move the money from PBs straight into them, though there is a £15k per person limit. (OK, you can also do £15k in trust, but that's more complicated.)