Anyone heard of the National Fire Savers Union Credit??

mirukuru

As a firefighter, I am eligible to join the above company. They take money out at source so avoiding you paying tax on it, and instead of interest they pay a dividend at the end of the year dependant on how well they've done with all the cash, if I'm reading correctly.

The standard membership account seems to be around >1.75% and the savings account is >2.25% but I can't work out if this is worth going for and if so how much you need to be putting into it to make it worthwhile?

Also, must be missing summat, but what's stopping you getting it transferred into an account and then simply withdrawing it, therefore avoiding paying tax almost altogether? There must be some mechanism but I have no idea what it is?!

mirukuru

Sorry, yes, that one. Words wrong way round.

xylophone

The National Fire Savers Credit Union?

http://www.firesavers.org.uk/savings.php

http://www.firesavers.org.uk/dividends.php

We do not deduct tax on dividends paid, and it is members' responsibility to ensure that they pay any tax due. We are required to report dividend payments in excess of £250 to HM Revenue and Customs.

Some accounts, such as the Christmas Club, are not eligible for dividend payments. Please see the individual terms and conditions for our accounts.

https://www.moneyadviceservice.org.uk/en/articles/credit-union-savings-accounts

Regarding the tax status of these dividends, the comment here

http://www.taxationweb.co.uk/tax-articles/income-tax/credit-union-savings-know-your-tax.html

seems relevant.

There are two types of income that savers might receive from holdings with a Credit Union:

returns to members by way of a ‘dividend’ (this varies year on year, depending on how well the Credit Union has done); and
interest on a savings account with the Credit Union (this will be at a particular rate – check the Annual Equivalent Rate (AER))
The Credit Union member or saver will have to pay income tax on both types, unless they are a non-taxpayer. Both types are treated as savings interest for tax purposes, despite the first being called a ‘dividend’.

Credit Unions do not deduct tax from either form of interest before they pay it to the member or saver. This is helpful for non-taxpayers as it means they do not need to claim back tax; but for those who have other income, meaning they are a taxpayer, it could lead to them having to tell HMRC about it and pay some extra tax.

See also

https://www.gov.uk/government/publications/personal-savings-allowance-factsheet/personal-savings-allowance

There is also this https://www.gov.uk/government/publications/dividend-allowance-factsheet/dividend-allowance-factsheet

but if the comment in the previous link is accurate, then it is not relevant to the situation.

Stevie_Palimo

Are you asking if there is a way to dupe paying your tax ?

mirukuru

Nope, but it's slightly worrying that your mind jumps straight to that! You appear to have missed the main question competely... why's that??

What I asked was, if it IS taken before tax (and the organisation haven't actually been able to tell me yet, I'm waiting for a call back from them cos it sounds odd: it was told to me that that happens from an existing member), and with the rough dividend amounts showing, then how much do I need to make it worthwhile if at all. Should I just stick with other means of savings? Trying to work out if there's much or any benefit from this scheme. If taken before tax, it must increase the overall interest saving, correct?

Onto mr dodgy's point, as pointed out above, I was told that it was taken from source BEFORE tax was paid, so my second question was does that sound right cos it seems obvious even to me that unless a mechanism is in place then you can just withdraw the money and avoid tax. Just doesn't seem correct.

Thanks for the reply xylophone, but I had actually read all that as it's on their website, I was after someone who's good with figures and savings and the sort giving me an opinion on whether it's a worthwhile institution as it looks like every other investment out there. There must be a reason why it's only for fire personnel, a key to making it particularly attractive, but if there is, it's not sold very well cos I can't see it.

xylophone

According to the web site, your contributions can be taken through pay roll but it does not say that it is taken pre tax - as you say, you would need to check this with the organisation but I would be surprised if the contribution were taken from pre tax income.

You will have noticed that there is a maximum amount that can be contributed

http://firesavers.org.uk/faq.php

and that the rate of dividend is not guaranteed.

That said, with interest rates elsewhere as low as they are at the moment, I don't see that there's much to lose - and your savings are protected up to the usual amount through the FSCS.

mirukuru

Yup, that's what I was wondering.

Got a call back from them and they confirmed it did NOT come out pre-tax, so it's basically just another institution, doesn't seem to be much benefit over any other; any individual has just got to decide whether getting an undecided dividend is worth it over the tiny amounts already out there at the moment.

Seems they're pretty on par with the best paying isa's so I guess it's pay your money, takes your choices!

Another case cracked Scooby.

xylophone

Seems they're pretty on par with the best paying isa's

Which best paying cash isas are currently paying 1.75-2.25%?

http://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html