Best place to save money that is due for tax?

20SmthngSver

Some of the easy access accounts have an introductory rate for 12 months then drops. But 2018/19 tax is due January 2020.

There are quite a lot of 3, 6 and 9 month accounts now, mostly Sharia compliant, and they offer higher rates.

chr0s

Patrol wrote: »

An offset mortgage can be handy for this sort of thing as the money is readily accessible when required. Depending on circumstances (need for a mortgage, current offset deals, tax efficiency, availability of savings accounts) it's worth considering.

No plans or aspirations to own a house just yet, but thanks for the suggestion.

20SmthngSver wrote: »

There are quite a lot of 3, 6 and 9 month accounts now, mostly Sharia compliant, and they offer higher rates.

What are the implications of Sharia compliance?

colsten

chr0s wrote: »

What are the implications of Sharia compliance?

Google is your friend. E.g. https://www.moneyadviceservice.org.uk/en/articles/sharia-compliant-savings

bowlhead99

chr0s wrote: »

No plans or aspirations to own a house just yet, but thanks for the suggestion.

What are the implications of Sharia compliance?

Without worrying about whether I get it exactly right or offend any sensitivities, essentially if you love your old Biblical texts you might feel that making profit from money lending is a sin and lending should have no interest rate. Old religious laws from Judaism and Islam deem usury to be a bad thing; and a principle of Islamic finance is that money is simply a medium of exchange and you shouldn't be allowed to get a profit benefit simply by lending to or receiving money from someone.

However, for hundreds of years people have thought that religion is all very well but not when it gets in the way of capitalism. So to get around the basic tenets, there are a whole host of fiddles and loopholes, which allow you to get away with modern western financial practices while dressing them up as something else to get off on a technicality. I am being flippant but these days there is a lot of money to be made from selling Islamic financial products from mortgages, bank deposits and investment funds to an audience who want to be able to follow their strict laws but also want to participate in a convenient financial transaction which carries a suitable interest rate without calling it interest.

For example you can't lend someone £100 and say they must give you back £103 in a year, but it's fine to take an investment participation in their business venture which has a high probability of making a profit of £3 to be returned with your capital in a year's time, which isn't "interest", honest guv.

Without boring you with the minutiae, effectively a Sharia-law-compliant deposit in an islamic finance institution will allow you to participate as an investor in certain business which is expected to deliver a certain 'profit' over the period in which the bank has your money, and the accretion of that profit from the entirely legitimate business venture would not take the nature of interest, as long as they choose not to call it interest and instead call it something else like 'expected profit rate' (you expect it will be x% AER, but it's not guaranteed, because paying or receiving an agreed rate of interest for holding someone's money or assets is a bad thing).

You would not expect a well established Islamic bank to deliberately renege on their 'expected profit rate' because they would lose credibility. So, you can generally take the advertised rates as being just like interest rates, but strictly the proposed return for the arrangement in which you participate is some sort of honest and ethical 'profit' from the venture, which is definitely not 'riba' (exploitative and unjust interest-like gains from simply making someone hold your money).