Best Savings Policy for 16 year old student

skldenton

Hi I need some help. My Grandad gave me a cheque for £1500 to invest for my 21st birthday (5 years). I have spent some time looking for the best way to invest/save and am finding it hard.
If I go for a high interest savings I can get just over 5% but taxman gets me. If I go ISA, they all say you have to be over 18. Childrens savings are definately under 16.
I have a basic bank account with lloyds, no cheque book so I can't even get access to the money unless I draw bits out using my limited cash card.

All I want to do is stick this great present from my grandad into an account that can earn me money over the next 5 years.
HEEEEEEEEEEEELP

Kazza242

Hi. Welcome to MSE.

skldenton wrote:

Hi I need some help. My Grandad gave me a cheque for £1500 to invest for my 21st birthday (5 years). I have spent some time looking for the best way to invest/save and am finding it hard.
If I go for a high interest savings I can get just over 5% but taxman gets me.

As you are a student, I doubt you would earn enough to take you over the tax-free threshold. Each person receives a personal allowance from the Inland Revenue at the beginning of every tax year (from April 6). You are allowed to earn up to the personal allowance and no tax will be deducted from your earnings or interest from your savings. The personal allowance for this tax year is £4,895. If you earn over this allowance, then you will have tax deducted from the interest on your savings.

Unless you register for gross interest with the Inland Revenue, 20% will be automatically deducted from the interest you receive from your savings account. To register, you will need to complete a form called R85. You can download it from the Inland Revenue website or you can get it from your bank/building society. Here is a link to the form.

skldenton wrote:

If I go ISA, they all say you have to be over 18. Childrens savings are definately under 16.
I have a basic bank account with lloyds, no cheque book so I can't even get access to the money unless I draw bits out using my limited cash card.

No, this is not correct. To open a mini cash ISA, you need to be 16 years old or over. I think it would be a good idea to open an ISA, as at some point you'll become a tax payer. Why not start shielding your money from the tax man now. Here is a list of mini cash ISA's:

Yorkshire BS E-ISA pays 5.20% interest and is run via the Internet only. Min balance £10

Derbyshire BS Tracker ISA pays 5.20% interest and is run via branch, post, phone or Internet. Min balance £10.

Halifax ISA Saver Direct pays 5.15% interest and is run over the phone or internet. Min balance £1.

Teachers BS Mini cash ISA pays 5.15% interest and is run via the post only. Min balance £1,000.

Kent Reliance variable rate mini cash ISA pays 5.11% interest and is run in branch or via the post. Min balance £1.

High Interest savings accounts that can be opened by 16 year olds:

Yorkshire Building Society E-Saver pays 5.20% interest and comes with a cashcard. It is run via internet. Min balance £250.

Halifax web-saver pays 4.90% interest and is run via the Internet. Min balance £1. You can ask for a cash card with this account, but you will receive a lower rate of interest.

mary

I've just received an application form for a Regular Savings Account for 6.75% gross with the Principality Building Society (it's in Wales). I noticed that 16 year olds can apply, as I happen to have a 17 year old daughter.
It's https://www.principality.co.uk It's a regular saver Bond for 1 year. You could drip feed some of your money into that.

skldenton

Thanks, the yorkshire isa looks good.