Isa?

Barry_Cade

I am retired and my state pension + a little private pension gives me approx. £125 per wk. As that is well below my allowances is there any advantage in getting an ISA as I wouldn't be likely to pay tax on the interest on the savings I have (£30k)? So should I just go for the highest rate I can get and put some in long term and some in short term for emergencies?

moneyfoolish

My wife is in the same position and unless you expect to get a huge increase in income from anywhere it seems there is little advantage of an ISA to you. I'd say go for the best rate you can get.

Vortigern

Barry_Cade wrote: »

I am retired and my state pension + a little private pension gives me approx. £125 per wk. As that is well below my allowances is there any advantage in getting an ISA as I wouldn't be likely to pay tax on the interest on the savings I have (£30k)? So should I just go for the highest rate I can get and put some in long term and some in short term for emergencies?

No, you don't need an ISA to avoid tax on your savings, but you must register an HMRC Form R85 with your bank(s) to stop them deducting tax automatically.

Best rate on £30K could be the Santander 123 current account, if you can pay in £500 per month and set up 2 direct debits.

With an income of £125 per week, you may qualify for Pension Credit. Have you checked?

colalba

Vortigern wrote: »

No, you don't need an ISA to avoid tax on your savings, but you must register an HMRC Form R85 with your bank(s) to stop them deducting tax automatically.

Best rate on £30K could be the Santander 123 current account, if you can pay in £500 per month and set up 2 direct debits.

Definitely register for gross interest. Don't be put off, it is a simple form. Many banks let you register just by clicking on a check box if you use their online systems. If you go for the Santander account it can be done online.

innovate

Vortigern wrote: »

Best rate on £30K could be the Santander 123 current account, if you can pay in £500 per month and set up 2 direct debits.

?

You need TWO 123 accounts for £30K since interest only gets paid on max £20K. Santander do allow 2 123ser person.

Other considerations should include a Nationwide FlexDirect (12 months 5% AER) as well as a First Direct reg saver @ 6% AER. Plus, a Halifax Reward account for the monthly fiver (which may be £6.25 if Halifax can manage an R85 on that account).

OP, seeing you are a pensioner, just spending a day or so to catch up with things on this board, focussing on current accounts and regular savings, should help finding quite a few money-making ideas.

xylophone

With an income of £125 per week, you may qualify for Pension Credit. Have you checked?

http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS48_Pension_Credit_fcs.pdf?dtrk=true

"The standard minimum guarantee is £145.40 a week for a single person"

"Your capital will not affect your PC unless you have more than £10,000.
Every £500 or part of £500 of capital over £10,000 is assumed to give you a weekly income of £1 a week. This is called ‘deemed income’. For example, if you have savings of £12,200, a weekly deemed income of £5 is included in your income assessment."

The OP has £30,000 in capital.

It is possible that for this reason he does not qualify for GPC? That said, he needs to read the whole of the above and try the calculator https://www.gov.uk/pension-credit to check whether his personal circumstances may mean that his appropriate minimum guarantee is greater than the standard £145.40?

Barry_Cade

Thanks everybody for the advice. Actually I may have not made it clear - as the £30k is in a shared account with my wife who gets about £160 per wk on her state pension - would this alter things much? The Santander thing worries me a little as our combined pensions being paid in would probably just about make what is required to be paid in monthly (I also have a few direct debits coming out) and some months if any big items were purchased - maybe not. This would mean constantly getting involved/monitoring with the bank drawing out to live on etc. Basically the nearest Santander is a few miles away and not as convenient as the local bank I use for day to day matters. Perhaps my biggest fear is that using a card at an ATM or a shop/garage could somehow be cloned/hacked with that sort of money in the account - that's why at the moment I use a debit card with not much in and top it up from another account as needed. Maybe I'm being too old fashioned and careful? It's just weighing up this fear and inconvenience to get 3% as against the 1.75% (which ends this month) I'm getting now, which would only be perhaps a couple of hundred pounds a year difference? Don't get me wrong - the wife and I get on great - but I've always made sure we've both got our own money and can spend independently on small things so there's no arguments or "looking down noses", but the big amounts are saved together. Thanks once again to all for your advice and any comment/thoughts on the above would be greatly appreciated.

Eco_Miser

You keep your existing current account, treat Santander mainly as a savings acount, with two or more direct debits coming out, bounce money between accounts, using online banking or standing orders, to make the required in-payment, and keep the debit card safely locked away.
Many of the contributors to this board have £1000 make a round trip through up to 14 accounts each month just to meet the conditions of what they see as savings accounts.

Eco_Miser

innovate wrote: »

Plus, a Halifax Reward account for the monthly fiver (which may be £6.25 if Halifax can manage an R85 on that account).

They can't. I tried, but still get just £5.

opinions4u

Eco_Miser wrote: »

They can't. I tried, but still get just £5.

You can download an R40 form and fire it off to HMRC and claim the extra £1.25 a month back off them.

kidmugsy

Here's a possibility worth careful thought: it would be inflexible but remunerative. Contribute to some sort of personal pension. You are allowed to pay in up to £2880 p.a. The provider claims back £720 from the tax man so you will have £3600 p.a. there gross. After (say) four years of that you could put the fund into capped drawdown. That means you'd get back 25% as tax-free lump sum, and the rest would come out as taxable income every year - but it wouldn't be taxed since you are not a taxpayer! That way the boost of the £720 (x4, say) is pure gain. The downside is that part of your capital is locked away, with you getting the income from it. It may also be that the costs would outweigh the advantages: can anyone here suggest some provider who would be cheap for this?

Second possibility (and much more flexible - no locking of money away): if you have a private pension containing less than £2k you can take out the lot under the "stranded pots provisions": you'd get 25% as tax-free lump sum, and the rest as a taxable income. But you wouldn't have to pay tax on it. Pure gain. You're allowed to do this trick twice in your life and so is your wife. You might each of you want to do a cash-in in two successive years to keep you well away from the tax threshold: call these years 1 and 2. I've seen Fidelity mentioned as a firm where the costs would be low enough to justify the trick. Can anyone else here suggest any other provider? Note that while you were contributing to a private pension to build up the funds for this second idea, you wouldn't also be doing the first, presumably.

Third possibility: you don't mention your wife having a private pension. I'll suppose she doesn't have one. Then she could build up a private pension pot with a view to taking it out under the "trivial commutation" rule. The max size allowed is £18k: if she's already withdrawn £4k as two stranded pots, then I assume she'd be allowed £14k tops. In fact, to avoid tax on the 75% taxable bit she might aim much lower: you can do the arithmetic, allowing for interest on savings. So that might be a useful scheme for years 3 and 4.

And then you could always consider the first possibility for years 5, 6, 7 and 8.

A fourth possibility, depending partly on your ages, would be for one (or, in principle, both) of you to suspend ("defer" is their preferred verb) your old age pension for a while, living off a bit of your savings in the meantime. When you restart the pension, you can select that your reward be extra pension at the rate of 10.4% of your State Retirement Pension for each full year you've suspended it. So effectively you are turning a bit of your savings into extra inflation-protected income at a very good rate. There's no need to do it for a full year: the minimum useful time is (if memory serves) five weeks.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210220/DWP024.pdf
Naturally you'd ensure that your extra pension wasn't big enough to make you a taxpayer.

It will occur to you that with clever timing you could have your wife using the third possibility while her State Retirement Pension is deferred, so that she has more tax-free capacity.

Careful arithmetic on these ideas could result in your ending up with just as much in your savings, i.e. with your flexibility preserved, but with more tax-free income conjured up "out of nowhere".