What are my options for saving monthly?

Dan12

Hi all, hopefully you can help with this question about savings:

I'm a recent homeowner, with the help of my Dad.

I'm paying back a mortgage, but I also need to pay him back an amount each month. He's asked me to put this into a savings account so that in time, my sister can have this cash.

It would be around £100-£200 per month for now, and more when my wages go up. I already have a personal ISA so I don't just want to add it to that.

Ideally it would be a new savings account (or investment) where the three of us could see it. The more interest it can earn the better, obviously.

What are my options?

Thanks

PeacefulWaters

This link from the top of the page:
http://www.moneysavingexpert.com/savings/best-regular-savings-accounts

All three of you seeing it online might be less easy to achieve.

jimjames

Current accounts will take £4k at 5% which will last you a while and far better interest than an ISA.

Beyond that regular savers pay a good rate during the year you pay in but you'd need to move it after that.

alanq

I don't see why your sister needs to see it. It isn't her cash yet. Why not pay the money back to Father each month then at least two of you know that you have been doing the right thing and there will be no temptation to stop saving and start spending the money that you need to repay.

ManAtHome

Only other bit is if any of you are non-taxpayers, have the account in their name - you can always bung them the cash each month to fund it.

Dan12

Thanks all, looks like a regular saver is the way to go as those high interest current accounts require £500+ to be deposited in.

In terms of tax, if I have a regular saver in my name, does that mean that I have to declare any interest as income at the end of the year when I do my tax return, therefore effectively doubling my tax? (once out of the account, and once as a declared income).

bowlhead99

Dan12 wrote: »

In terms of tax, if I have a regular saver in my name, does that mean that I have to declare any interest as income at the end of the year when I do my tax return, therefore effectively doubling my tax? (once out of the account, and once as a declared income).

When you receive the money into the account, the bank will deduct 20% for income tax. So you are paying tax as you go along, whenever the interest is received.

Depending on the account, either the account will receive a bit of interest (and incur tax) each month, or maybe just receive all the interest and pay all the tax once at the end. Or maybe it'll pay annually on 31 December or some other date, as much as you've earned to that point, and the rest on the anniversary of that date or when you close the account if earlier. By the end of the period if you've earned (say) £100 of interest you'll have received £80, because £20 of tax has been paid for you.

If you are only a 20% taxpayer and the bank has been taking tax from you as you go, there's no need to pay any more tax. If you're a high rate taxpayer who should be paying 40% or more on your income, then you have to declare the amount to the tax man and arrange to pay him the extra tax, because you should have paid £40 not just £20 and your bank can't know that. You can write them a cheque or have your tax code adjusted for the next year, as it will only be a small amount on the numbers you're talking about.

You pay tax on a receipts basis so if the interest doesn't arrive in your account until the anniversary of the account opening there will be no interest received or tax payable this year, only for the 2015/16 tax year. That would depend on the account, because some will pay monthly and some on a fixed date each year.

vectistim

Dan12 wrote: »

Thanks all, looks like a regular saver is the way to go as those high interest current accounts require £500+ to be deposited in.

Go and look at the threads covering these in more detail.
eg: with the TSB one the £500 can just bounce in and out in one day.