2,000 per month to save. Where to save it?

swains

Hi, I'm currently working abroad, with my wage been paid into UK account. I had planned to open an ISA to deposit my savings but with the low rates on offer am wondering if there is a better option. Having read through the savings page I am still unsure what savings account / isa would be best for me.

I will be able to save 2,700 pounds per month for the next two years.
Can arrange for 2 direct debits on an account if needed
Am happy to lock money away for up to 2 years
Am open to the idea of having a couple of accounts (although may be limited as only have two direct debits)
Will not have any bills coming out of my account
Have not had any problems opening accounts in the UK as am still registered to a UK address

Initial thoughts are to go with the Santander 123 although with no water/gas/electric/council tax etc bills going out wonder if this is the best option if I miss out on the cashback.

Any help would be really appreciated as I've been struggling to even get close to a decision!

Thanks

Tom

jimjames

If you're not UK resident then an ISA isn't possible anyway.

Do you need to keep it in cash or would investment in pension or other non ISA funds be an option?

badger09

OP

Your UK residence status for tax purposes will have an impact on your options. What is it?

swains

I would rather keep it in cash as I would like to access it after 2 years to put a deposit down on a house (hopefully).

I actually have no idea about my UK residence status - I have informed the tax office and student loans that I am working abroad though

atush

It sounds as if you are non resident. You could have problems opening more accounts (best to set these up before you go). If you have a UK postal address, this will help.

You can't have an isa, but can open a savings account- some places such as Coventry/Bham midshires will offer accts to non residents, many like tesco wont.

bowlhead99

swains wrote: »

I actually have no idea about my UK residence status - I have informed the tax office and student loans that I am working abroad though

You should probably find out.

Generally, if you are UK resident you should be paying UK tax on your worldwide income, albeit with some relief or allowances to avoid double-taxation.

If you are not UK resident, and out of the UK for at least a full tax year, you will only be paying tax on your UK income - and if that's just interest income at a couple of percent on a few thousands or tens of thousands it is unlikely to be higher than your annual personal allowance. But if you're resident somewhere else, they might want to tax you on your worldwide income (including UK interest income), again albeit with some relief or allowances to avoid double-taxation.

The fact that you have "a UK registered address" might support the case for you being seen to maintain a residence in the UK but the fact that you specifically told HMRC you are leaving the country implies you do not want to be a UK tax resident or tax payer. If you do not want to be a UK tax resident or tax payer you would be unwise to try to open an ISA or an (e.g.) Santander 123 account where the terms and conditions are such that you must be a UK resident to open.

The reason you would be unwise is that it would not be helpful when arguing with HMRC that you were not a UK resident this year and don't want to pay UK tax on your worldwide income, to have signed paperwork that says you are a UK resident at the time of applying for these accounts.

If you are not bothered by that, and have maintained a UK permanent address where (e.g.) Santander can credit check you, then their 123 account is pretty good, as it will hold a lot of months' worth of savings and earn a good rate of interest on the whole amount up to £20k. You can get more in other accounts (e.g. 5% at TSB or Nationwide) but as each of their accounts only hold one month's saving you may feel it's not worth the hassle to start engaging with lots of banks, particularly if you are not even in the country. Once you've filled the Santander account shop around again.

Otherwise if you don't want to blag your way into an account that a non-resident shouldn't be able to have, then the accounts open to non-residents (like the ones atush mentions, or NS&I) may be of use.

richyg

Keep out of the way of Generali Vision advisers

swains

Ok, thanks so much for all the info - I had no idea about any of this. Do you happen to know how I go about finding out about whether I am classified as a UK residence?
I have been offered a couple of ISA's using my parents address in England but have not opened one as of yet.
I think the first step for me will be finding out whether I am currently classed as a UK resident and then proceed from there as to whether it will be worthwhile trying to earn any interest or not

Jonbvn

swains wrote: »

Ok, thanks so much for all the info - I had no idea about any of this. Do you happen to know how I go about finding out about whether I am classified as a UK residence?

You have to check using the HMRC statutory residence test.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/427484/150506_RDR3_govuk_hyperlink__updated_078500.pdf

As a simple rule of thumb, if you are working full-time overseas and spend less than 91 days in the UK, you are most likely non-resident for tax purposes.

atush

Are you paying tax/NI on your income? if not, then you aren't resident.

So you need to save in cash. Wherever will take your deposit. HSBC has an expats service, but their rates are low.