Which bank account?

RobBob_3

Currently I have:
Natwest Current A/C (my name) (and linked e-Savings A/C) (overdraft 1500)
Barclays Current A/C (my name)
Nationwide Current A/C (joint with wife) (and linked e-Savings A/C) (overdraft 1500)

For a long time had salary going into Natwest, but following seeing this site opened Nationwide account. (thanks Martin)

However, I need to save money in my wife's name (non-worker) to avoid higher rate tax on savings.

Salary is 3800 a month. My outgoings are roughly 1500 – 1700 a month max.
I'd quite like a joint account with Alliance & Leicester for the travel insurance (unless anyone knows if this is included in BUPA Premier Network Max and BUPA Dental which I have but my wife does not – I can't find documents for this so I'm not sure if it's covered).

However presumably I should open an Alliance & Leicester account in my wife's name only to avoid tax (ditto a linked A&L online e-Savings account for 5.35%)?

My idea is close Natwest and Barclays. Open A&L joint account, salary into Nationwide, pass-through excess (i.e. 2000 a month) to A&L and then from there into A&L savings account in wife name only. Does this make sense or is there an easier way? Is there other accounts out there that can give me better benefits?

I could just buy a flat of course to keep house prices up, that'd solve the problem quickly

PS I inserted the overdrafts not because I use them but because they should cover if a salary doesn't arrive for some reason and a standing order moves money.

Walletwatch

The Alliance and Leicester a/c in your wife's name is the first step as you say - that's a no-brainer. However, you need to keep in mind that the 5.35% is only for the first £25000, so if you already have a lumpsum to invest right now, you may want to use up the 25000 and put the rest into an ING Direct account, again in your wife's name.

Also do you have an ISA? If not, you should get one - at least a mini-cash ISA, and maybe look at the investment ISA, depending on your risk orientation. Is your wife not expected to be taking up work in the near future? If she might start working, it might be worthwhile to use up her ISA allowance as well (it might not make too much of a difference today, when she's a non-taxpayer, but it may, if she intends to start working sometime in future)

RobBob_3

Thanks Walletwatch

I didn’t know about the 25,000 limit for A&L. However, we’ve only got about 15000 at the moment so that issue is not a problem for the moment. Additionally, while “expected” 3.2% is not exactly a rate beater I like the idea of put half of savings into Premium Bonds for the gamble element.

My wife won’t be working in the future, as far as we can see. That does raise other issues I should think about (e.g. income protection?) but I haven’t look at these yet (and dreading it). So I assume an ISA doesn’t make sense as can hold all things in her name and so long as income is under 4715 a year that’s’ okay? At 5% interest that’d be £95000 savings before need to be tax efficiency aware right?

I am relatively risk averse and also should not for work related reasons invest in shares or stock-market related derivatives so investments ISA etc. not an option.

Talked with friends – the one tax thing I’m missing is a pension. I don’t have one (which is okay as I’m 26?) but it does sound more and more like money down the drain – tax relief and work will match my contributions up to 5% salary (not sure if that’s gross or net). So, maybe that’s my silly mistake – would advise others to check that! Does anyone know a good pensions calculator online (equiv of https://www.whatsthecost.com for pensions).