Virgin Money new account

Daniel1646

Hi everyone, I am a new member and have a really daft question and am sure someone on here will know the answer.

I am in the lucky position to have a large amount of savings (£80,420) and wish to start a savings account with Virgin money with their 2 year fixed rate issue 372 account.
If i`ve worked it out right they pay 1.61% so I make this roughly £1294 of interest, but is this amount spread over 2 years or paid both years making a total of £2,588.
If its £1294 and the interest is paid monthly over 2 years it would be less than the £1000 tax allowance per year as I am a basic rate tax payer so I wouldn't pay any tax on it??

Thanks

Dan

masonic

The 1.61% rate is per year. Would you be satisfied with a 2 year fix paying just 0.8% per year? Are you aware you can get a 2 year fix paying over 2.2%?

Are these savings needed for something in the next few years? It's a large amount to hold in cash over the long term.

Daniel1646

Hi

Thanks for replying but I'm even more confused, you say that rate is per year and also 0.8 per year. I just want the best account without paying tax on it if possible.

Thank you

Dan

Dazed_and_confused

Some basic rate payers can currently receive £5,999 taxable interest per year with the tax rate being 0%.

The exact amount depends on how much your wages, pension, business profits, rental income etc is over your Personal Allowance.

May be just £1,000 which is taxed at 0% but could easily be much more if you have fairly low other income.

Remember the £1,000 doesn't even apply usually until you have total taxable income of £17,500 (in the 2019:20 tax year).

YorkshireBoy

The product in question is a cash ISA isn't it?

Dazed_and_confused

It appears so. Which kinda makes my post a waste of time!!!

Zanderman

Daniel1646 wrote: »

Hi everyone, I am a new member and have a really daft question and am sure someone on here will know the answer.
I am in the lucky position to have a large amount of savings (£80,420) and wish to start a savings account with Virgin money with their 2 year fixed rate issue 372 account.
If i`ve worked it out right they pay 1.61% so I make this roughly £1294 of interest, but is this amount spread over 2 years or paid both years making a total of £2,588.
If its £1294 and the interest is paid monthly over 2 years it would be less than the £1000 tax allowance per year as I am a basic rate tax payer so I wouldn't pay any tax on it??
Thanks Dan

Dan
Interest rates are annual. So it is 1.61% per year. The poster who referenced 0.8% was merely pointing out that if it was 1.61% over 2 years it would only be 0.8% per year, which is a really bad rate. But as it's annual that doesn't apply. Forget the ref to 0.8%!!

The product you're asking about is an ISA. ISA interest is tax free. So the £1000 tax free interest allowance is irrelevant. All the interest on ISAs is tax-free. That's the whole point of them.

You could get a better rate over 2 years in savings that aren't in an ISA, but you would pay tax on those. You'd have to work out whether those non-ISA accounts would be better or worse. Or just stick with what you are proposing already, which isn't bad (for an ISA)

badger09

Hmmmm

Unless OP's £80420 is already in a cash ISA he will only be able to pay in £20k in this tax year. If he waits a few days to open the account, he could pay in £20k this tax year & another £20k on 6th April. He would need to make sure both deposits were within the 30 days specified by Virgin.

The risk is that Virgin pull the account:cool:

The above also assumes he hasn't already paid into a cash ISA since 6/4/18.

Obviously, if its already in a cash ISA he can just ask Virgin to transfer the existing ISA

Perhaps OP can clarify

Daniel1646

Hi

It is currently in another virgin account 'earning' 0.25 pc. Its not in an isa
It is currently making a pathetic £15 pm
Thanks

Dan

Paul_DNAP

If you've not invested in an ISA in the 2018/19 tax year, do so before it ends, put the full £20k in there. And then open another one (or even add to the previous one if you can) as soon as the 2019/20 tax year starts, again full £20k (check the main part of this site for best rates, but the Virgin is not hideously out of touch).


That will put £40k of the money out of the realms of income tax on interest, and the interest on the remaining £40k ought to be below the PSA (depending on what else you have) if you put that into a decent rate.


Other thoughts about stocks and shares ISA, depending on your risk profile and if you want it invested longer term.


If you do nothing else, at least shift it away from 0.25% - even if the taxman takes a touch of your interest, you will still be left with more than you're earning now.

jimjames

Paul_DNAP wrote: »

If you do nothing else, at least shift it away from 0.25% - even if the taxman takes a touch of your interest, you will still be left with more than you're earning now.

Absolutely. You can get 1.5% instant access so keeping any money at 0.25% is crazy, move it asap!