The new tax free savings allowance

joe134

Eco_Miser wrote: »

True. It's a rate of 6% per annum, that is, 0.0164+% per day on the current balance, just over 16p per £1000 per day. A 5% account would pay under 14p per day per £1000 on whatever was in the account. It may be generally accepted, but that doesn't make it right. It was generally accepted that the earth is the centre of the universe.NO! 6% is greater than 5%, so under the same circumstances - paying in a fixed amount each month - the regular saver will beat the current account.

If you've a lump sum, it's different, but even then you'd be better off transferring as much as possible to the 6% account.

No matter what it is, it still will be taxed at 20% at year end,april 15, after allowances.Next year, more allowances,april 16, and year after that, another £1000 more allowances,april 17, taxfree IF, it comes to fruition.

Archi_Bald

FOREVER21 wrote: »

As a rule of thumb it is generally accepted that the actual interest overall paid is half the advertised rate ie 3% with this one.

You will find that on this forum, it is not generally accepted to say that the AER of an account is only half the AER quoted by the provider.

The entire point about AER is to give an unambiguous percentage for the interest an account pays.

If you save £300 a month for 12 months in a 6% AER RS, you will have earned £115.96 before tax. If the AER was only 3%, you would only make £58.24.

If you save £300 a month for 12 months in a 5% AER current account, you will have earned £95.45 before tax.

It is the £115.96 and the £95.45 you need to compare if you want to compare between RS and current accounts. As you would expect, a 6% account pays more than a 5% one.

May be have a google to find out more about AER.

Eco_Miser

joe134 wrote: »

No matter what it is, it still will be taxed at 20% at year end,april 15, after allowances.Next year, more allowances,april 16, and year after that, another £1000 more allowances,april 17, taxfree IF, it comes to fruition.

Yes, any RS maturing between now and 5 April 2015 will be taxed if the recipient has an income over £10k, any maturing between then and 5 April 2016 will be tax-free if the recipient's income is less than £15.6k, and for the year ending 5 April 2017 nearly everyone will be getting their interest tax-free (if the plans go ahead).

joe134

Eco_Miser wrote: »

Yes, any RS maturing between now and 5 April 2015 will be taxed if the recipient has an income over £10k, any maturing between then and 5 April 2016 will be tax-free if the recipient's income is less than £15.6k, and for the year ending 5 April 2017 nearly everyone will be getting their interest tax-free (if the plans go ahead).

Just one little dispute Eco, NOT, nearly everyone, only those above £16.5k,interest,in year 16>17, which is a lot of people, but, I would dispute it's nearly all.It would be interesting to know the figure.?excluding Meoue' :-)

FOREVER21

Archi_Bald wrote: »

You will find that on this forum, it is not generally accepted to say that the AER of an account is only half the AER quoted by the provider.

The entire point about AER is to give an unambiguous percentage for the interest an account pays.

If you save £300 a month for 12 months in a 6% AER RS, you will have earned £115.96 before tax. If the AER was only 3%, you would only make £58.24.

If you save £300 a month for 12 months in a 5% AER current account, you will have earned £95.45 before tax.

It is the £115.96 and the £95.45 you need to compare if you want to compare between RS and current accounts. As you would expect, a 6% account pays more than a 5% one.

May be have a google to find out more about AER.

I take your point about AER, the meaning of which I am very familiar. The point of my posts was the actual return on a 6% regular saver if you read them again you will see I never mentioned AER

If you read my post #19 you will see I quote the actual interest earned again no mention of AER.

I am very aware to obtain fair comparison rates AER must be used this was not the subject of my posts.

le_loup

If you don't use AER, what measure would you refer to use?
As has been said 6% is higher than 5%.
Drip feed monthly into a 5% easy access account and drip feed monthly into a 6% monthly saver and tell me which pays more.


..... and remember "A wise man etc."

joe134

FOREVER21 wrote: »

I take your point about AER, the meaning of which I am very familiar. The point of my posts was the actual return on a 6% regular saver if you read them again you will see I never mentioned AER

Too me, the aer and actual return on rs are the same.? you get the same .amount deposited divided by 12 months aer .? = actual amount.?

Eco_Miser

joe134 wrote: »

Just one little dispute Eco, NOT, nearly everyone, only those above £16.5k,interest,in year 16>17, which is a lot of people, but, I would dispute it's nearly all.It would be interesting to know the figure.?excluding Meoue' :-)

Sorry I don't understand your only those above £16.5k,interest,. Anyone with over £16.5k interest would pay tax, being the few who are not 'nearly all'.

Anyone with total income under£15.6k will get all their income tax-free. In addition, all basic rate and higher rate taxpayers would get £1000/£500 interest tax-free (i.e. not pay up to £200 tax that would otherwise be charged).
Tax-exempt (ISA) interest is totally excluded from the above

That's 95% of the population supposed to be not paying tax on interest.

joe134

Eco_Miser wrote: »

Sorry I don't understand your only those above £16.5k,interest,. Anyone with over £16.5k interest would pay tax, being the few who are not 'nearly all'.

Anyone with total income under£15.6k will get all their income tax-free. In addition, all basic rate and higher rate taxpayers would get £1000/£500 interest tax-free (i.e. not pay up to £200 tax that would otherwise be charged).
Tax-exempt (ISA) interest is totally excluded from the above

That's 95% of the population supposed to be not paying tax on interest.

It was your" nearly all" that I was referring to. Who's figures are these 95%.? Some thing tells me it's wrong. As an OAP, who are the majority of Account holders, I fall into the above £16.5 k group and will pay tax on interest still, and know umpteen others. I'm not being pedantic, but , just don't believe all the figures regarding this subject.

eskbanker

joe134 wrote: »

As an OAP, who are the majority of Account holders

For someone questioning the source and veracity of figures, where did you get THAT one from?!