if you are able to save

[Deleted User]

then look at the ns&i thread on the savings board. These are only worth while if you pay tax ie the equivalent interest on 22% tax band is 7.15% and on the 40% tax band it is 9.75%

I have just learned that the certs can be rolled over on maturity at the same terms ie rpi linked plus interest. This makes them a superb, safe savings vehicle as we head to retirement

22% tax is paid on £2231-34,600 and of course tax bands change from age 65

missile

kittie wrote: »

22% tax is paid on £2231-34,600

Where did you get this info?

margaretclare

Hello, Kittie

Thanks for the info. This would be ideal for anyone who has maxed out their ISA allowance because no tax is payable on those.

I save £300 every month into Hargreaves Lansdown's equity ISA and I also have a cash ISA with Yorkshire BS. DH usually saves £200 every 4 weeks, but he won't this month because of various extra expenses (including my birthday present, new fencing panels, his new computer etc). But he normally has £200 left over at the end of the 4 weeks when the next payment drops in, and he puts it into his cash ISA.

Margaret

EdInvestor

Current tax rates and allowances:

http://www.hmrc.gov.uk/rates/it.htm

As of 2008 the 10% starting rate band is being abolished and the basic rate will come down to 20% .New personal allowances not yet announced AFAIK.

Biggles

kittie wrote: »

then look at the ns&i thread on the savings board. These are only worth while if you pay tax ie the equivalent interest on 22% tax band is 7.15% and on the 40% tax band it is 9.75%

I have just learned that the certs can be rolled over on maturity at the same terms ie rpi linked plus interest. This makes them a superb, safe savings vehicle as we head to retirement

22% tax is paid on £2231-34,600 and of course tax bands change from age 65

I think you'll find 20% is the rate paid on savings, 22% is on earned income. I make the equivalent gross rates 7.19% and 9.58% respectively.

missile

Thanks guys. Not wishing to critiscise but Kitty's post, but I felt it was missleading for older couples who may not fully understand the TAX system.

Many retired people can easily achieve better returns from a savings account than with NS&I savings bonds. If my sums are correct? Those under 65, with a taxable income < £7,456 and for a couple < £14,916 would pay no TAX on their savings. Ditto for a couples 65-74 < £ 18,362 and 74+ < £18,644.

The arguement about ISA allowance "use it or loose it", is hardly relevant to those over 65.

margaretclare

missile wrote: »

The argument about ISA allowance "use it or loose it", is hardly relevant to those over 65.

It is if you're still taxpayers, as we are.

Also I don't understand the point about 'taxable income for a couple'. Since the Budget of 1990 each individual has his/her own tax allowance, which is £7550 each. You don't receive income as a couple. You receive it as 2 individuals.

Margaret

missile

Most people over 65 are retired and their income is unlikely to rise, so if ISAs are not TAX efficient to them today it will not be relevant to them tomorrow.

The argument about ISA allowance "use it or loose it", is hardly relevant to those over 65.

Use it or loose it can be a consideration for those (like students) who may not benefit from ISAs today, but could become high rate tax payers in the future and thus it MAY be to their advantage to invest today.

My post was for those who might not understand the TAX system, as well as you do. I do appreciate that we all have a personal allowance, I quoted them in my post. To be pedantic there still is married couples allowance and many couples have joint bank and savings accounts. In my post I have shown how much taxable income an indivdual and a couple can have before they would pay TAX.

IMHO, there are better savings oportunities for silver savers with taxable income less than quoted in my post.

margaretclare

missile wrote: »

To be pedantic there still is married couples allowance and many couples have joint bank and savings accounts. In my post I have shown how much taxable income an individual and a couple can have before they would pay TAX.

To be equally pedantic, people over 65, whom you're talking about, would not get this. We get it - just. One of the parties has to have been born before April 1935. We get this split between us to apply to our individual incomes.

It has been my understanding that it's more advantageous to a couple NOT to have joint bank- and savings accounts, because of the individual tax allowances.

We can each receive £7550 a year before we start paying tax on our incomes. Income does rise in line with inflation - SRP, and also some of my annuities are index-linked and rise by 3% a year. So it's not true to say that retired people's income never rises.

Margaret

missile

people over 65, whom you're talking about, would not get this.

If you refer to the link posted by Ed you will see this is not correct.

My post was not restricted to "over65". I gave the relevant allowances for all ages <65, 65-74 and over 74.

I said,

many couples have joint bank and savings accounts

, which I believe is true. Where did I say this was advantageous?

I said,

Most people over 65 are retired and their income is unlikely to rise.

I believe this to be true. Where did I say never?

I believe it was widely reported that pensioners are worse off following the last budget. Perhaps you are more fortunate than most?

TAX can be quite a taxing subject and what works to your advantage may not necessarily work for someone else.

NS&I provide good savings oportunities in the right circumstances, indeed I have money in them. However they are not suitable for everyone. The purpose of my post was to try to avoid anyone being misslead.

margaretclare

I believe it was widely reported that pensioners are worse off following the last budget. Perhaps you are more fortunate than most?

I think I must be. Perhaps this is due to the fact that there are 2 of us in this marriage who receive our incomes individually (earned them individually!) and we each have a tax allowance of £7550. This allowance is better than the previous year's which means that we now pay very little tax - but we still do pay some, which is why we prefer to save mainly in ISAs.

I really pay little attention to statements like 'it was widely reported that pensioners are worse off...' I would need to know - what pensioners? What is the difference which has made them worse off? Do you mean all pensioners, some pensioners, which ones? Pensioners are as diverse a group of people as any other group, A statement like this is as misleading and erroneous as the statement 'all teenagers are hooligans'.

Anyone now entitled to the married people's tax allowance, born before April 1935, is going to be at least 72, as we are, not 65 as you stated. It doesn't seem to be widely known that this allowance can be split between the two people in a couple, if it is more advantageous to do so. It certainly is more advantageous for us.

The fact that I am able to save £300 routinely every month into my equity ISA, and DH is able to save at least £200 at the end of each 4-weekly period, means that we perhaps are better off than some. Although certainly, it will be a long long time before we get to the stage of having to worry about IHT - we're nowhere near that level. This is perhaps the best state to be in - not rich, but a darned long way from being poor.

Margaret