Inheritance lump sum saving to limit tax on interest.

electric_comperella

Hi everyone,

My grandmother passed away a few months ago after a long time battling dementia.

Apologies if the information I'm looking for is on site elsewhere but I'm not in the ideal headspace for picking through it all at the moment as its been a terrible year or so tbh....

So here's the situation...

After her estate has been divided I have been left with about 45k the burden of what to do with it is weighing on me as I know my gran would've wanted me to be careful with it ( she was always a frugal person having grown up during ww2) I myself have managed to scrimp and save about 18k over last few years and am wondering how best to invest now.

I have my own money in a 123 account which gives 1.5% per year and dripfeeds 5 regular savers 4 @ 2.25% and 1 @ 5%

I am a basic rate tax payer and earn less than 10k a year, single parent of 1 so have access also to my daughters tax free allowance as she is a nil rate tax payer.

Ideally I would like to keep the money easy access as I am not sure yet what I plan to do with it but would like the flexibility of easy access as and when I find a plan.

Am thinking ISA to avoid savings interest tax but concerned that I'll lose out on interest which may outweigh the taxation....

Any advice welcomed.

Thanks in advance

Ella x

Dazed_and_confused

so have access also to my daughters tax free allowance as she is a nil rate tax payer.

How do you manage to do that?

And you can, in some circumstances, earn upto £17,500 before paying tax on savings this year.

What is your taxable salary and any other earned income (company benefits and the like) going to be this tax year?

But irrespective of that you are looking at being able to have minimum of £6,000 interest with no tax from what you put in your op

I do mean you, not you and your daughter!

xylophone

http://www.litrg.org.uk/tax-guides/other-tax-issues/savings-and-tax

https://www.gov.uk/savings-for-children

barginfinder

you can open 2 tesco current accounts, put 3K in each and get 3% interest, no min pay or direct debits required

ColdIron

Tesco needs direct debits now

To earn 3% AER credit interest on balances up to £3,000 until 1 April 2019, simply pay in at least £750 and pay at least three Direct Debits each statement month (excluding Direct Debits to Tesco Bank savings accounts)

http://www.tescobank.com/current-accounts/

RG2015

barginfinder wrote: »

you can open 2 tesco current accounts, put 3K in each and get 3% interest, no min pay or direct debits required

This used to be the case with Tesco Bank (before 1st April) but you now need to deposit £750 every month in both accounts and set up 3 direct debits that come out of each of these accounts every month.

MoneySavingUser

electric_comperella wrote: »

have access also to my daughters tax free allowance as she is a nil rate tax payer.

As mentioned in xylophone's second link - any interest she earns over £100 from money you have put in her account is taxable on you.

This is to avoid people using their children's accounts to avoid paying tax!

https://www.gov.uk/savings-for-children

However, this doesn't apply to money in a Junior ISA.

barginfinder

RG2015 wrote: »

This used to be the case with Tesco Bank (before 1st April) but you now need to deposit £750 every month in both accounts and set up 3 direct debits that come out of each of these accounts every month.

thanks, is that for new accounts only?, I'm still getting my interest

RG2015

barginfinder wrote: »

thanks, is that for new accounts only?, I'm still getting my interest

Yes, although I guess they will change it at some point in the future. The 3% is guaranteed until April 2019 so I would expect pre-April account holders to be okay at least until then without the revised conditions.

electric_comperella

MoneySavingUser wrote: »

As mentioned in xylophone's second link - any interest she earns over £100 from money you have put in her account is taxable on you.

This is to avoid people using their children's accounts to avoid paying tax!

https://www.gov.uk/savings-for-children

However, this doesn't apply to money in a Junior ISA.

Yeah was thinking junior ISA as Gran wanted it to help her at Uni but left it to me to sort how much and how....

The remainder I'm thinking ISA vs easy access highest interest paying savings but can't do the whole juggling DDs and monthly minimum paying in amounts

Thanks for all replies so far