Redundancy payout, unsure what to do with it.

Jamesh1000000

Hi Guys

Im being made redundant shortly and think I may beable to walk into a 12 month contract straight away.

Now I will be getting between £20000 - £30000 pay off and have never seen anywhere near that sort of money so I guess my questions are:

1. what are my best saving options?
2. will it be ok to hold in a current account (HSBC Advance) untill I decide what to do?

Im currently in rental property so no morgage to pay off.

All help apreciated

Sycorax

Firstly open some type of saving account pdq! I'm sure HSBC will have some kind of linked instant access account you can open online immediately.
Don't leave you money in a current account unless it's an interest bearing account. You wont get much on an instant access account but owt is better than nowt.

Interest rates are pants right now, but if you can tie your cash up for a while look for some longer term fixed rate bonds (you can do a search on here).
If you're a tax payer and I assume you are, if you haven't used your ISA allowance then have a look at some fixed term ISAs. they attract a better rate of interest if you can leave the cash for 3+ years and, of course the interest is tax free, again doing a quick search here is as good as any place to start.

patman99

Listening to Richard Spendlove on the radio over the weekend, he was in a similar position so stuck £1000 in Premium Bonds. So far he has had 300 wins in 10 years (and unlike the Lotto, you can always get your £1000 back whenever you want).

You don't say how old you are, but you do seem sensible-enough to actually look into saving your windfall rather than blowing it all on having a good time.

bikerchris

I found this thread as I received a redundancy payment, and using the self-assessment website, it appears that I may owe tax on this "tax free" redundancy payment. So as a precaution, I would say you should be prepared for a tax payment (i.e. don't blow it all on a yacht!)

bikerchris

Further Info: I rang the tax office and it seems that I didn't owe tax on my redundancy payment after all. Seems I shouldn't have been filling out an on-line assessment until after April 2013!

Xbigman

If you don't own a house 30k would be a good deposit. So an instant access savings account is the way to go for now.




X

snowcat53

You may be better reposting this on the Savings and investments board.. The answer will depend on what other cash and savings you have, yoiur situation, goals etc. One option, if you haven't taken out an ISA this tax year, is to shelter some of it in an instant access cash isa so you don't pay tax on the interest. Until you decide what to do with it..
As for premium bonds.- I am not a fan.