Only freedom will do

AlexLK

edinburgher wrote: »

I believe you could still have an account in your name and a joint account with your wife, you answered the other question yourself

As regards interest, you are largely right, but interest is paid monthly and you will pay tax each month at your current rate. I'll oversimplify slightly. From memory, your wages are structured so that you withdraw a salary in basic wage territory. This means you'd get 5% * 80% (you lose 20%) = 4%.

*But*, you'd only get 4% if you paid the money in and left it for exactly a year. In reality, you'll get 1/2 of 4% each month (or thereabouts). More like £81.

Sorry to be so thick but may I ask a few questions?

i. Accounts - I'm still confused about the amount of accounts. Currently my wife and I bank with Natwest, we have an account each, so one Mr. K, one Mrs. K. One joint account, Mr. and Mrs. K. and one business account - Mr. K Ltd. Does this mean we can open no more current accounts without closing one?

ii. Interest tax - I thought everyone got a £15,000 tax free savings allowance?

iii. Interest tax (if the above is incorrect) - I am a director of a ltd company so my tax depends on whether the interest as counted as a salary or dividend and my wife has a salary which falls into the 40% tax bracket. If the account were in my name would I pay no tax and if the account was in my wife's name would she pay 40% tax?

iv. "Wages" - does this mean the amount the bank gives in interest or the salary amount paid into the bank from working?

v. 20% - Why would I lose 20%? (5% x 80% = a loss of 20%).

vi. 4% - Why would I only get 4% from paying the money in and leaving it?

vii. £81 - How do you arrive at this figure? I'm really confused about how 5% becomes 2% (1/2 of 4%) each month.

gallygirl

AlexLK wrote: »

Sorry to be so thick but may I ask a few questions?

i. Accounts - I'm still confused about the amount of accounts. Currently my wife and I bank with Natwest, we have an account each, so one Mr. K, one Mrs. K. One joint account, Mr. and Mrs. K. and one business account - Mr. K Ltd. Does this mean we can open no more current accounts without closing one? Ed was talking about a different bank and opening accounts there - it has no impact on your Nat West accounts. I have 5 current accounts, all with different banks, 2 actually 'used', the other 3 just get funding to get rewards or feed the linked savings accounts.

ii. Interest tax - I thought everyone got a £15,000 tax free savings allowance?
Yes, - £15,600 this year but specifically has to be an ISA product, either cash based or stocks & shares. The interest rates on cash ISA's are so low you're normally better off paying tax on an ordinary account (but from 16/17 the 1st £1,000 in interest will be tax free - don't know how it will work yet).
iii. Interest tax (if the above is incorrect) - I am a director of a ltd company so my tax depends on whether the interest as counted as a salary or dividend and my wife has a salary which falls into the 40% tax bracket. If the account were in my name would I pay no tax and if the account was in my wife's name would she pay 40% tax?
Not sure on the company aspect - but 20% tax is deducted at source. Your wife would/should be doing a self-assessment each year and paying a further 20% on all interest received.
iv. "Wages" - does this mean the amount the bank gives in interest or the salary amount paid into the bank from working?
Ed was talking about your salary.
v. 20% - Why would I lose 20%? (5% x 80% = a loss of 20%).
As 20% tax is automatically deducted. You can claim it back (or fill in a form to get it paid net) if your earnings are below your personal allowance.
vi. 4% - Why would I only get 4% from paying the money in and leaving it?
As above - the effect of the 20% tax means you get 80% of the 5% which is 4%
vii. £81 - How do you arrive at this figure? I'm really confused about how 5% becomes 2% (1/2 of 4%) each month.

Not sure what Ed means, will let him explain.

If you start to look at regular saver accounts remember if it is £300 a month and 5% interest on average you would only have £1,800 in there so the interest would be along the lines of £1,800 x 4% (with the 20% deducted).

Alchemilla

Like your siggy, Gally.

edinburgher

vii. £81 - How do you arrive at this figure? I'm really confused about how 5% becomes 2% (1/2 of 4%) each month.

I think GG missed her calling

Where do you get 2% from Alex? I looked at what happened if you save £2,000 for a full year assuming 20% of your interest deducted as basic rate tax. This takes the advertised 5% down to roughly 4%.

I used a spreadsheet formula called Future Value (FV). It maybe wasn't the best one for the scenario, but it should be easy enough to calculate that 4% of £2,000 is £80?

Edit: Sorry, I've confused you. It should have read '1/3 of 4%' (i.e. 4%/12)!

edinburgher

Monthly S&S ISA payment increased to £320 (got to try and catch El, every time I turn round she's saved another £20k in her pension)

Karmacat

I'm in awe! My eyes glaze over and then my head hurts when I look at the figureworks ... hope you enjoyed the nesting, Ed.

edinburgher

Cooked:

• Houmous
• Bread
• Mushroom duxelle for pork wellington
• Lamb casserole

Now to make myself a salad for tomorrow's lunch and do an uber batch of dishes

slowlyfading

Your food always sound so good are you on the final countdown now? Have you got all the baby things you need?

edinburgher

slowlyfading wrote: »

Your food always sound so good are you on the final countdown now? Have you got all the baby things you need?

We've got a list of about 6 things, maybe another £50 or so. Just making sure everything's prepared and shipshape

edinburgher

Pork fillet Wellington is the fanciest looking easy dish I have ever made - om nom nom :drool: