5% TSB vs 4% Club Lloyds (Reg Saver) Tax Free

Drebin911

I have both of the above accounts:

Am I right in thinking that my 4% Regular Saver with Lloyds (which will not mature until next year when I won't have to pay Tax on my interest) will earn me more than my 5% TSB account (which pays interest monthly, and am taxed @ Basic Rate).

This based on the same amount paid into each account.

I know the difference in interest will be miniscule but just wanted to check.

Cheers

masonic

The difference would be miniscule and only arises if you measure over less than one year. 5% is 4% after 20% tax, but assuming your regular saver has been open a while, interest from the TSB account will be earned at a slightly lower net rate and the effect of compounding over a period of less than a year will not fully compensate for that.

shortcrust

It won't pay more because 5% taxed at 20% is the same as 4% untaxed. Have you already got a TSB regular saver at 5%? That would obviously pay more if it matures in a non tax paying year.

Remember that the first £1000 of interest from savings will be untaxed from next April. This post had nudged me to realisation that a few of my regular savers will now be untaxed, so thanks!

Archi_Bald

shortcrust wrote: »

Remember that the first £1000 of interest from savings will be untaxed from next April.

£1,000 is the savings interest allowance for BR tax payers. Lower allowances apply for HR and Advanced Rate payers.

Kernel_Sanders

Archi_Bald wrote: »

£1,000 is the savings interest allowance for BR tax payers

Bit of a sweeping statement. My mother is a BR taxpayer but hers is £5000.

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Archi_Bald

Kernel_Sanders wrote: »

Bit of a sweeping statement. My mother is a BR taxpayer but hers is £5000.

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We were talking about the savings interest allowance from 2016. It will be £1,000 for BR tax payers, including your mother if she is a BR Tax payer.

molerat

Kernel_Sanders wrote: »

Bit of a sweeping statement. My mother is a BR taxpayer but hers is £5000.

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If she actually pays some tax then her allowance will not be £5000