Saving

EM2013

Hi,

I am in the last two years of my PhD and because I am living at home, I am trying to save as much as possible, to help me when I finish my course.

I have a standard Halifax current account and an Instant saver account. In the past two years I have not exceeded the 5,000 or so limit on what you put in before you get taxed on it, however, I will do this year with my savings boom.

I was therefore wondering what advice people had on saving money in the next year or two and whether I should go down the route of transferring some money into an ISA of some sort?

Lokolo

You get over £5000 in interest?

The amount of savings you have has no effect on tax. The amount of interest you get does.

EM2013

Ah sorry I didn't quite explain what I meant! I was referring to getting taxed on the interest because of the amount of savings!

Lokolo

Right. Well you don't get taxed on the amount of savings you have. It's INCOME that is taxed (hence the term "Taxable Income").

The normal personal allowance this tax year is £8105. This is the amount of interest you can earn before you pay tax on anything above that.

You can have £200,000 in savings and pay no tax because it may not earn interest. It's the interest that counts.