The Top Fixed Interest Savings Discussion Area

BooJewels

20122013 said:

BooJewels said:

@refluxer beat me to it - I was going to make the same suggestion - if you have no income, why not get interest paid away monthly and use this as income and you can earn up to £18,750, before you'd pay tax on anything above that. 

If you max out your ISA allowance each year and maybe put some in PBs (also tax free, max £50k holding) you'd have to have towards half a million earning interest elsewhere before HMRC would trouble you for some tax.  If you added your full allowance to ISAs each year, you'd progressively reduce your potential taxable interest.  So your 5 year plan would see £100k (depending on what Rachel does in the budget) beyond tax.

BooJewels @refluxer and @masonic who had alerted me about better to get a monthly paid interest account. 

As my earlier post, the monthly interest paying account is Natwest which pays only 4.2% comparing to others which pays 4.45%.   May I check do you mean to put £50K from the total of my cash ladder into a PB? as it will be tax free and can withdraw  anytime to fund my yearly ISA allowance or whenever I need the money?   

If I my total interest will be below the  £18,75 pa figure, would it be better to get bank interests guarantee or PB prizes (tax free)?   

I'm a bit confused by what you're intention is and what you mean by your particular ladder.  But to explain a couple of my own comments - I suggested PBs purely as the prizes are tax free, so they work a bit like an unpredictable ISA. The returns aren't as good as maybe they were a year ago, but might have a purpose if you really want to avoid tax and are close to your allowance.  But if you're going to add to an ISA each year to max your allowance, it would make better sense to fund it from a taxable source first.

If you're not going to be earning more than your assorted tax allowances, then just maximise the returns you can get.  I personally don't care that much about avoiding tax at the moment, I'd actually be happy to be earning that much in interest alone.  I'm just maxing my ISAs now, because once I start getting SP,  then it will be more important and the more I can get inside that wrapper now helps me in the future.

You mentioned a lower rate for monthly paid accounts - that's probably always going to be the case, as that interest won't be compounding - I.e the AER, whereas the monthly paid rate that's quoted is the gross, without being allowed to compound.  If you don't need the interest for income, then even if it's monthly paid, leave it in the original account to compound.

Only you can decide what to do, depending on your circumstances and needs.

Eco_Miser

Just remember that all the suggestions above are based on the current tax rates and allowances, they could change adversely in the forthcoming budget.

masonic

20122013 said:

BooJewels said:

@refluxer beat me to it - I was going to make the same suggestion - if you have no income, why not get interest paid away monthly and use this as income and you can earn up to £18,750, before you'd pay tax on anything above that. 

If you max out your ISA allowance each year and maybe put some in PBs (also tax free, max £50k holding) you'd have to have towards half a million earning interest elsewhere before HMRC would trouble you for some tax.  If you added your full allowance to ISAs each year, you'd progressively reduce your potential taxable interest.  So your 5 year plan would see £100k (depending on what Rachel does in the budget) beyond tax.

BooJewels @refluxer and @masonic who had alerted me about better to get a monthly paid interest account. 

As my earlier post, the monthly interest paying account is Natwest which pays only 4.2% comparing to others which pays 4.45%.   May I check do you mean to put £50K from the total of my cash ladder into a PB? as it will be tax free and can withdraw  anytime to fund my yearly ISA allowance or whenever I need the money?   

If I my total interest will be below the  £18,75 pa figure, would it be better to get bank interests guarantee or PB prizes (tax free)?   

Natwest pays a lower rate in part because it allows early closure (subject to a penalty). So that means that it is treated as an accessible account by HMRC and interest is taxable on receipt even if paid into the fixed account. The accounts to avoid are those which do not permit access except in exceptional cases, AND which pay their interest into the savings account, since in that case all of the interest would be taxable at maturity and may breach your tax free bands.

If you won't pay tax on any of the interest, then there's really no advantage to using PB (unless you are particularly lucky).

intalex

FirstSave 2-year fix now down to 4.25% AER, equalised with their other terms

BooJewels

intalex said:

FirstSave 2-year fix now down to 4.25% AER, equalised with their other terms

I checked a couple of days ago and it was still showing at the higher rate, but wasn't actually available to open.  Looks like we got in just in time.

ColdIron

Investec have a 4.50% 1 year fix

https://savings.investec.com/fixed-rate-saver

dali21

New fixed Bonds at  Kent Reliance:

1 Year      4.51%  
2 Years    4.42%
3 Years    4.26%

trickydicky14

Just noticed DF Capital have pulled all savings accounts for the time being. Looks like they are getting ready for lower rates next week.

slinger2

trickydicky14 said:

Just noticed DF Capital have pulled all savings accounts for the time being. Looks like they are getting ready for lower rates next week.

Some are still available for existing customers but at lower rates: 4.30% for the 1 year and 4.25% for the 2 year. I think it's my last day to top up my 4.41% 2 year fix. Wasn't going to but maybe I will now.

refluxer

slinger2 said:

trickydicky14 said:

Just noticed DF Capital have pulled all savings accounts for the time being. Looks like they are getting ready for lower rates next week.

Some are still available for existing customers but at lower rates: 4.30% for the 1 year and 4.25% for the 2 year. I think it's my last day to top up my 4.41% 2 year fix. Wasn't going to but maybe I will now.

Good to know that DF Capital do that - shows it's often worth logging in to online banking with certain banks if a rate you were after disappears.

Oxbury are another bank who regularly have fixed rate accounts available at good rates to existing customers only, which can't be seen unless you're logged in. It's often the 3, 6 and 12 month fixed rate bonds that fall into this category, although they only have a 6 month fix available at the moment.