Confused about Tax allowance on savings

Mary_Alice

eskbanker said:

Mary_Alice said:

eskbanker said:

Mary_Alice said:

I will soon have around £80,000 inheritance to put somewhere safe. I know I will have to split it between banks due to the 85K safety net. I was looking to put most of it in a 2% Bond for a year as I know I won't need it until I decide what is best.

[...]

For years I have worried about paying bills/mortgage etc , but viewed it as a challenge to balance the books.

If you'll be receiving £80K and implicitly (from the latter remark) don't already have significant savings then surely you're unlikely to breach £85K, but in any case that limit doesn't apply at first to money received from inheritance, where up to £1m is protected for up to six months, so you have plenty of time to consider your options before that £85K limit would come into play:

https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/

I have £12,000 saved up slowly in an ISA over many years 

In which case worrying about paying bills/mortgage etc would seem to have been wholly unnecessary, many would be thrilled to be in that situation!  Anyway, in terms of the £80K inheritance, simply putting it in any institution other than the one holding your ISA will suffice, so you still don't need to split it (the inheritance) for the FSCS protection....

I have been put at risk for redundancy twice and made redundant twice in 10 years so I started saving an emergency fund as that was such a scary time. so although £12,000 is a good amount it would not have lasted long.  That is why I want to make the most of the inheritance so I never have to live off credit cards again. 

Mary_Alice

Albermarle said:

Mary_Alice said:

xylophone said:

You could use your ISA allowance.

You mention £12000 in ISA saved over many years.

How much in this tax year?

Only 260 this year so far due to all the expenses with sorting his estate out so I could top this up to the max £20,000 then save the rest in a Bond, I can get a better rate Bond if I fixed for 3 or 5 years but the building society said they rate will probably increase in Sept  so wit til then ,then it my increase again so  not to lock in a rate for the the 5 years.  so much to learn !!

Most people 'in the know' are limiting any fixed rate savings bonds to one year or even 6 months, as at least one more increase in savings rates is expected in the not too distant future. Nobody knows for sure though.

As a more general rule 5 years is a long time to tie your savings up. It might work out and it might not, a lot can happen in 5 years. If you can lock away money for 5 years or more, then you may want to consider investing some of the money. If you think you will not need some of the money for 10 years or more, then you should probably be thinking along these lines.

 I will soon have around £80,000 inheritance to put somewhere safe.
To want to put it somewhere 'safe' is perfectly understandable. However although savings accounts are safe, they do not protect your money against inflation very well.
For example if you save today £80K at 2 % interest then in 12 months time, it will be £81,600 . However with inflation at 9% it will only be worth ( in terms of what it can buy) £74,250 . Even if the gap between savings interest and inflation is less, over many years it will cause a significant drop in the value of what you have inherited.

By all means get it put away in savings account for now, but keep in mind for the long term that some kind of investment or pension would probably be a better place for some of it at least.

You do not mention your age but one very important to check now is will you be entitled to a full state pension?
You can check here Check your State Pension forecast - GOV.UK (www.gov.uk)

I have finally found time to do this and set up a Gateway account. It says I have 40 years of Ni contributions ( I never had children so no break in employments ) and it says I contracted out for a while. The pension forecast is £185 with £13.40 coming from cope?? I will look at this on the pension sticky. I know I get annual statements about the amount that is in there but I don't know about the weekly payment, I still have 12 years to go to retirement . While I set up a Gateway account i also saw the link to claim the working from home Tax rebate so I have applied for the last 3 years so Thanks for the link 

jimjames

Mary_Alice said:

eskbanker said:

Mary_Alice said:

eskbanker said:

Mary_Alice said:

I will soon have around £80,000 inheritance to put somewhere safe. I know I will have to split it between banks due to the 85K safety net. I was looking to put most of it in a 2% Bond for a year as I know I won't need it until I decide what is best.

[...]

For years I have worried about paying bills/mortgage etc , but viewed it as a challenge to balance the books.

If you'll be receiving £80K and implicitly (from the latter remark) don't already have significant savings then surely you're unlikely to breach £85K, but in any case that limit doesn't apply at first to money received from inheritance, where up to £1m is protected for up to six months, so you have plenty of time to consider your options before that £85K limit would come into play:

https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/

I have £12,000 saved up slowly in an ISA over many years 

In which case worrying about paying bills/mortgage etc would seem to have been wholly unnecessary, many would be thrilled to be in that situation!  Anyway, in terms of the £80K inheritance, simply putting it in any institution other than the one holding your ISA will suffice, so you still don't need to split it (the inheritance) for the FSCS protection....

I have been put at risk for redundancy twice and made redundant twice in 10 years so I started saving an emergency fund as that was such a scary time. so although £12,000 is a good amount it would not have lasted long.  That is why I want to make the most of the inheritance so I never have to live off credit cards again.

In that case you might want to look at topping up your pension depending how much you already contribute