Large amount of money to invest

jj1966

Hi,

I have a large lump sum to invest £55,000 , due to inheritance.

I dont want to take risks and put in Stocks and Shares ISA.

If l put in fixed rate bond l will have to pay tax, yet if l put in an ISA l will get little as rates are low?
I was thinking about putting some money in both, but unsure

Any advice would be appreciated

JJ

Tom99

[FONT=Verdana, sans-serif]Remember you will not pay tax on the 1st £1000 or £500 of interest outside the ISA depending on whether you are a basic or higher rate taxpayer.[/FONT]

oz0707

Risk level doesn't sound very high. Premium bonds or highest paying savings account till you figure out what you want to do with the money and what your plans are

RG2015

Virgin Money fixed rate ISAs
1 year 1.50%
2 year 1.66%
3 year 2.00%
5 year 2.15%

Top rate fixed rate bonds
1 year 1.85%
2 year 2.10%
3 year 2.30%
4 year 2.47%
5 year 2.61%

It is quite close after 20% tax is deducted. Charter Savings bank also has some good fixed rate ISAs which for some lengths are slightly better than Virgin Money. You may also want to check the early withdrawal possibilities and penalties.

PS As stated by Tom99 you will only pay tax on annual interest above £1,000 for a basic rate taxpayer.

jj1966

Hi,

I am a basic tax payer and if l invest in say a 2.25 bond at the end l will make around 5k and have to pay a lot of tax. As limit if 1000k. Therefore unsure if this is the right thing to do.

Any advice would be appreciated

RG2015

jj1966 wrote: »

Hi,

I am a basic tax payer and if l invest in say a 2.25 bond at the end l will make around 5k and have to pay a lot of tax. As limit if 1000k. Therefore unsure if this is the right thing to do.

Any advice would be appreciated

Your £5k is based on four years but depending on the bank this £5k may be spread over the 4 years.

£55k @ 2.25% is £1,237 per year in interest so you may only pay tax on £237 per year which is £47.

robber2

if you are married you could split this in two, effectively doubling the tax free amount.

Rob

kidmugsy

oz0707 wrote: »

Risk level doesn't sound very high. Premium bonds ...

If he gets a move on and buys £50k of premium bonds before the month ends he will qualify for the May "draw".

That'll give him the time he needs to learn about savings and investments.

RG2015

kidmugsy wrote: »

If he gets a move on and buys £50k of premium bonds before the month ends he will qualify for the May "draw".

That'll give him the time he needs to learn about savings and investments.

£50k could earn £54 per month in an easy access 1.30% account. So putting in Premium Bonds would "cost" the OP £54 per month.

jj1966

Hi,

I am a bit confused l assumed l am taxed when the bond ends.
So if l were to earn say 4k overall in interest l would be charged 20 % on this total when the bond ends and not each year. Is that right?

Bonds for me seem to have the edge, due to higher rate. I cannot split money as l am single person.

jj1966

BTW l dont need to acces the money and would prefer to lock it away, hence to earn a higher rate