What would you do with £15k

Alexland

HamSoulo said:

Alexland Thanks for that. Its a News to me, that someone is able to open multiple individual accounts for the same product with the bank. I will certainly try this. Thanks for the tip.

The nice thing is you can login to the Virgin website/app with the same details and see multiple accounts. One forum member has even opened 6 of them:

https://forums.moneysavingexpert.com/discussion/comment/78021755/#Comment_78021755

HamSoulo said:

I pay 40% tax, so my tax free savings cap is £500.

Have you considered if you can contribute more into your pension to avoid 40% tax? Extra pension contributions may also bring your total income down low enough to claim full child benefit (unclear if baby is born yet)

HamSoulo said:

spouse not working, so zero income and I guess, is eligible for £5000 for starter rate for savings.

Yes and her £12.5k personal allowance can also be used to earn interest without paying tax.

HamSoulo said:

Would you recommend withdrawal from cash ISA and putting it in some other product

If you are going to spend the money in 6-15 months then I don't see why you need a Cash ISA wrapper on it.

Just stick to reputable FSCS protected savings or current accounts.

Thrugelmir

HamSoulo said:

The rate is a disappointing 0.1% right now. this money is can be invested in ISA for a short duration around 6-15 months or can be kept in easy access account, it depends on what product is giving the best rate.

While the interest rate maybe disappointing. How much can you afford to lose?  Maintaining an optimal amount as an emergency fund. While using the remainder to overpay the mortgage at least provides a reasonable after tax return. Exceeds inflation and carries no risk of loss of capital. Optimisation rather than maximisation. 

HamSoulo

Alexland said:

The nice thing is you can login to the Virgin website/app with the same details and see multiple accounts. One forum member has even opened 6 of them:

https://forums.moneysavingexpert.com/discussion/comment/78021755/#Comment_78021755

Have you considered if you can contribute more into your pension to avoid 40% tax? Extra pension contributions may also bring your total income down low enough to claim full child benefit (unclear if baby is born yet)
Yes and her £12.5k personal allowance can also be used to earn interest without paying tax.

If you are going to spend the money in 6-15 months then I don't see why you need a Cash ISA wrapper on it.

Just stick to reputable FSCS protected savings or current accounts.

Alexland Thank you for the link. I read through it and I see one astute gentleman could open 6 while another one couldnt beyond 3. Lets see if I am able to open one in spouse's name, since my interest quota is filled already. Is it okay, if I transfer my salary savings to my spouse's account and then we open her virgin account (or accounts if allowed)?

About Pension: Another news to me, not well versed with Pensions either. Actually I am trying to understand more about the financial stuff, I guess growing up, with baby coming and all. I would love to reduce my tax liability and claim child benefit etc and stow some money in Pension, securing old age. How do I go about contributing more in Pension? MSE pension forum?

Spouse earnings: So she can earn £12500 as interests from Savings and current accounts with no tax liability! I wish we had that substantial savings to be honest, to earn significant amount of interest. However its good to know.

About ISA tax wrapper: 6-15 months is the time horizon I can lock this money. Beyond this I would want it to liquid, so if there is an urgent need I should be able to withdraw the funds at moments notice. So the emergency and/or need is not yet established. 
In case, I do not need it at all, I would want to earn returns tax free, say for prolonged period of time, a decade or more. Does that make sense or Im twisting myself in tax wrapper knots?
And Alexland, thank you so much, everytime you respond to me, I learn something new and very valuable. Respect.

HamSoulo

Thrugelmir said:

While the interest rate maybe disappointing. How much can you afford to lose?  Maintaining an optimal amount as an emergency fund. While using the remainder to overpay the mortgage at least provides a reasonable after tax return. Exceeds inflation and carries no risk of loss of capital. Optimisation rather than maximisation. 

Thrugelmir currently the risk appetite is very low. We plan to buy house next year and expecting our first child this year, so dont intend to lose any money. How does one arrive at the optimal amount of emergency fund? I consider myself quite conservative, not sure if its optimal.

Alexland

HamSoulo said:

Lets see if I am able to open one in spouse's name, since my interest quota is filled already. Is it okay, if I transfer my salary savings to my spouse's account and then we open her virgin account (or accounts if allowed)?

Well it should really be her opening accounts in her name and if accepted (unsure how they would feel about the lack of income) then there is nothing to stop you gifting the money into her account.

About Pension: Another news to me, not well versed with Pensions either. Actually I am trying to understand more about the financial stuff, I guess growing up, with baby coming and all. I would love to reduce my tax liability and claim child benefit etc and stow some money in Pension, securing old age. How do I go about contributing more in Pension? MSE pension forum?

Usually people start by considering if they can contribute more into their workplace pension. There is a summary about how pension contributions reduce your adjusted net income for child benefit in the below article. You may then be able to use marriage allowance. Remember regardless of if you are going to claim the child benefit money or not then it's worth at least your partner registering so she earns NI entitlement for being a parent towards her state pension.

https://adviser.royallondon.com/technical-central/pensions/state-benefits-pension-manuals/child-benefit-avoiding-the-tax-charge/

https://www.moneysavingexpert.com/family/marriage-tax-allowance/

https://www.moneyadviceservice.org.uk/en/articles/protecting-your-state-pension-when-you-have-a-baby#protecting-your-state-pension

Eco_Miser

HamSoulo said:

Spouse earnings: So she can earn £12500 as interests from Savings and current accounts with no tax liability! I wish we had that substantial savings to be honest, to earn significant amount of interest. However its good to know.

A person on a low income can receive each financial year

• £12500 from any source: earnings, pensions, Halifax rewards, dividends, and interest, PLUS
• £5000 further interest, PLUS
• £1000 further interest, PLUS
• £2000 further dividends, PLUS
• £12300 in realised Capital Gains
  

all without paying any income tax or capital gains tax, in addition to whatever they may receive inside an ISA.

That's Personal Allowance, Starting Rate for Savings, Interest Allowance (a 0% tax band), Dividend Allowance (another 0% tax band), and Capital Gains Allowance.

No wonder some Higher Rate taxpayers give their spouses all their spare money to invest.

HamSoulo

Alexland said:

HamSoulo said:

Lets see if I am able to open one in spouse's name, since my interest quota is filled already. Is it okay, if I transfer my salary savings to my spouse's account and then we open her virgin account (or accounts if allowed)?

Well it should really be her opening accounts in her name and if accepted (unsure how they would feel about the lack of income) then there is nothing to stop you gifting the money into her account.

About Pension: Another news to me, not well versed with Pensions either. Actually I am trying to understand more about the financial stuff, I guess growing up, with baby coming and all. I would love to reduce my tax liability and claim child benefit etc and stow some money in Pension, securing old age. How do I go about contributing more in Pension? MSE pension forum?

Usually people start by considering if they can contribute more into their workplace pension. There is a summary about how pension contributions reduce your adjusted net income for child benefit in the below article. You may then be able to use marriage allowance. Remember regardless of if you are going to claim the child benefit money or not then it's worth at least your partner registering so she earns NI entitlement for being a parent towards her state pension.

https://adviser.royallondon.com/technical-central/pensions/state-benefits-pension-manuals/child-benefit-avoiding-the-tax-charge/

https://www.moneysavingexpert.com/family/marriage-tax-allowance/

https://www.moneyadviceservice.org.uk/en/articles/protecting-your-state-pension-when-you-have-a-baby#protecting-your-state-pension

Alexland OH was able to open account with VM 
She hasnt opened another yet, will try next week. And I m wondering with banks been asked to prepare for negative interest rate by BoE, VM will be swiftly withdrawing this 2% account. 

Thank you so much for the links.  I have been trying to read about it, but I'm finding it difficult to wrap my head around it, with so many acronyms and technical terms sprinkled around generously. So, I thought I should first read basics of pension. 
Started with podcast on Which about pensions, which was good and started reading here on MSE Pension thread. And this thread got me so so confused
https://forums.moneysavingexpert.com/discussion/6239176/am-i-missing-something#latest

HamSoulo

Eco_Miser said:

HamSoulo said:

Spouse earnings: So she can earn £12500 as interests from Savings and current accounts with no tax liability! I wish we had that substantial savings to be honest, to earn significant amount of interest. However its good to know.

A person on a low income can receive each financial year

• £12500 from any source: earnings, pensions, Halifax rewards, dividends, and interest, PLUS
• £5000 further interest, PLUS
• £1000 further interest, PLUS
• £2000 further dividends, PLUS
• £12300 in realised Capital Gains
  

all without paying any income tax or capital gains tax, in addition to whatever they may receive inside an ISA.

That's Personal Allowance, Starting Rate for Savings, Interest Allowance (a 0% tax band), Dividend Allowance (another 0% tax band), and Capital Gains Allowance.

No wonder some Higher Rate taxpayers give their spouses all their spare money to invest.

Eco_Miser What you are saying is a non earning person/ low earner can earn £32800 through the sources you mentioned in your post, TAX Free??? That doesnt seem right! 
Did you mean OR instead of PLUS?

Thrugelmir

HamSoulo said:

Thrugelmir said:

While the interest rate maybe disappointing. How much can you afford to lose?  Maintaining an optimal amount as an emergency fund. While using the remainder to overpay the mortgage at least provides a reasonable after tax return. Exceeds inflation and carries no risk of loss of capital. Optimisation rather than maximisation. 

Thrugelmir currently the risk appetite is very low. We plan to buy house next year and expecting our first child this year, so dont intend to lose any money. How does one arrive at the optimal amount of emergency fund? I consider myself quite conservative, not sure if its optimal.

6 months outgoings. Likewise pots for major / one off items of expenditure. Little point in borrowing at high rates of interest. 

jimjames

HamSoulo said:

Eco_Miser said:

HamSoulo said:

Spouse earnings: So she can earn £12500 as interests from Savings and current accounts with no tax liability! I wish we had that substantial savings to be honest, to earn significant amount of interest. However its good to know.

A person on a low income can receive each financial year

• £12500 from any source: earnings, pensions, Halifax rewards, dividends, and interest, PLUS
• £5000 further interest, PLUS
• £1000 further interest, PLUS
• £2000 further dividends, PLUS
• £12300 in realised Capital Gains
  

all without paying any income tax or capital gains tax, in addition to whatever they may receive inside an ISA.

That's Personal Allowance, Starting Rate for Savings, Interest Allowance (a 0% tax band), Dividend Allowance (another 0% tax band), and Capital Gains Allowance.

No wonder some Higher Rate taxpayers give their spouses all their spare money to invest.

Eco_Miser What you are saying is a non earning person/ low earner can earn £32800 through the sources you mentioned in your post, TAX Free??? That doesnt seem right! 
Did you mean OR instead of PLUS?

They are Plus but the Capital Gains allowance is not for income so you can't just add that on. You need to make gains by selling an asset for more than £12300 more than you paid for it