Best option for savings tax wise?

Noneforit999

Hi

We currently have around 60k in savings ourselves and a further £20k for our 3 year old son.

The £60k is in a Chase 1.5% Easy Access saver of mine, I am a higher rate tax payer so I realise I have 40% tax on what we are earning about £500 a year in interest.

The £20k for our son is in the same type of chase account buy in my Wife's name, she earns £16,800 a year so basic rate.

I am thinking I would be best transferring it all to my Wife's savings accounts for now to reduce how much tax we pay for a start? Eventually we are going to lock most of the money into a longer term savings account but I want to see how the rates change first before locking in for a period of time so easy access seems the best option until we know more on rates etc. 

Thanks

NannaH

YBS have a rainy day account (that can be joint)  paying 2.5% for £5k then 2% above that.
Investec have a 1 year fix at 3.9%,  your wife could have £25k in there before paying tax on the interest. 

Expotter

If your wife doesn't have any other income, she actually has a higher savings allowance due to the starter savings rate she can earn  up to £18570 in total without paying tax on interest. It's explained on the MSE website
https://www.moneysavingexpert.com/savings/tax-free-savings/
Otherwise, just make sure you are making the most of your allowances first, there's a lot better rates  than Chase now, and then you could start looking at ISAs, Coventry BS has a limited access ISA (6 withdrawals/year) that will pay 2.25% starting on the 7thOct. There's also junior ISAs that you could look at (although your son wouldn't be able to access until he's 18 and it would be his money).

Dazed_and_C0nfused

Noneforit999 said:

Hi

We currently have around 60k in savings ourselves and a further £20k for our 3 year old son.

The £60k is in a Chase 1.5% Easy Access saver of mine, I am a higher rate tax payer so I realise I have 40% tax on what we are earning about £500 a year in interest.

The £20k for our son is in the same type of chase account buy in my Wife's name, she earns £16,800 a year so basic rate.

I am thinking I would be best transferring it all to my Wife's savings accounts for now to reduce how much tax we pay for a start? Eventually we are going to lock most of the money into a longer term savings account but I want to see how the rates change first before locking in for a period of time so easy access seems the best option until we know more on rates etc. 

Thanks

Don't forget that the £500 of taxable interest, which is taxed at 0%, still forms part of your "adjusted net income" so if you are liable to the High Income Child Benefit Charge it could mean you needed repay 5% of the Child Benefit.

Noneforit999

Dazed_and_C0nfused said:

Noneforit999 said:

Hi

We currently have around 60k in savings ourselves and a further £20k for our 3 year old son.

The £60k is in a Chase 1.5% Easy Access saver of mine, I am a higher rate tax payer so I realise I have 40% tax on what we are earning about £500 a year in interest.

The £20k for our son is in the same type of chase account buy in my Wife's name, she earns £16,800 a year so basic rate.

I am thinking I would be best transferring it all to my Wife's savings accounts for now to reduce how much tax we pay for a start? Eventually we are going to lock most of the money into a longer term savings account but I want to see how the rates change first before locking in for a period of time so easy access seems the best option until we know more on rates etc. 

Thanks

Don't forget that the £500 of taxable interest, which is taxed at 0%, still forms part of your "adjusted net income" so if you are liable to the High Income Child Benefit Charge it could mean you needed repay 5% of the Child Benefit.

I earn over £60k so we don't get child benefit. I didn't want the drama of having to apply for it and then pay it back so I opted not to have it in the first place. Thanks

jimexbox

Noneforit999 said:

Dazed_and_C0nfused said:

Noneforit999 said:

Hi

We currently have around 60k in savings ourselves and a further £20k for our 3 year old son.

The £60k is in a Chase 1.5% Easy Access saver of mine, I am a higher rate tax payer so I realise I have 40% tax on what we are earning about £500 a year in interest.

The £20k for our son is in the same type of chase account buy in my Wife's name, she earns £16,800 a year so basic rate.

I am thinking I would be best transferring it all to my Wife's savings accounts for now to reduce how much tax we pay for a start? Eventually we are going to lock most of the money into a longer term savings account but I want to see how the rates change first before locking in for a period of time so easy access seems the best option until we know more on rates etc. 

Thanks

Don't forget that the £500 of taxable interest, which is taxed at 0%, still forms part of your "adjusted net income" so if you are liable to the High Income Child Benefit Charge it could mean you needed repay 5% of the Child Benefit.

I earn over £60k so we don't get child benefit. I didn't want the drama of having to apply for it and then pay it back so I opted not to have it in the first place. Thanks

A mate at work didn't claim child benefit as he earned over 60k until he found out it affected his wife's pension. Obviously every situation is different and may not apply to you. 

 https://www.thp.co.uk/not-claiming-child-benefit-you-could-be-damaging-your-state-pension/

Notepad_Phil

Noneforit999 said:

...
We currently have around 60k in savings ourselves and a further £20k for our 3 year old son.
...

Have you considered putting at least a portion of that into investments for your son? Investments do go up and down, but unless you're going to need the money in the next 10 years then you're likely (but not guaranteed) to beat what you'd get by sticking to savings only.

Albermarle

As above, this investment platform has no charges for JISA's (although the investments them selves will have a charge)
Over an approx 15 year period you would expect mainstream investments to outperform any savings accounts.
Junior ISA | Invest in a Junior Stocks and Shares ISA | Fidelity

Noneforit999

Thanks for all the replies, very much appreciated.

In terms of my Son, we already have some money in a Junior Stocks and Shares ISA, although over 2 years its up only 0.3% despite being up nearly 13% 8 months ago, sign of the markets I guess.

Tempted to add more to it now with the market being 'low', I only invest in Index funds so not huge returns but would have been outpacing savings previously. 

redpete

Noneforit999 said:

Hi

We currently have around 60k in savings ourselves and a further £20k for our 3 year old son.

Not quit accurate.  You have £60k in a Chase account, your wife has £20k in a Chase account and you are considering £20k of your savings to be for your son some time in the future.

Is there any reason for keeping your £60k in your name?  If not than immediately moving £27k of it into your wife's account would get rid of any tax liability.

Then you can consider what to do in the nearly-short-term - e.g. putting it into easy access accounts that easily beat Chase.  Then medium term decision such as a better investment for your son (as others have said, S&S JISA definitely worth considering) and some combination of fixed term, notice and easy access accounts for your remaining cash.

Albermarle

In terms of my Son, we already have some money in a Junior Stocks and Shares ISA, although over 2 years its up only 0.3% despite being up nearly 13% 8 months ago, sign of the markets I guess
Yes join the club

Tempted to add more to it now with the market being 'low', I only invest in Index funds so not huge returns but would have been outpacing savings previously
Nobody knows what will happen next, but at least you know it is a better time to invest now rather than 9 months ago.
You only get huge returns by taking huge risks. Index funds are too risky/volatile for many people, but in the long term( > 10 years ideally)  should bring some steady growth above inflation.