Savings tax

Hello, 

I am in a good position of having savings where I can put the increased amounts from rate hikes to help pay off increases in my mortgage. 

Its abit of a strange question but as savings are going up should I try to stay under the £1000 personal interest allowance? I'm on paye but worry that going over this allowance will mess up my wage and tax code etc but I also want to earn as much as possible. 

Also how high to people expect savings rate to reach for easy access? 

Replies

  • eskbankereskbanker Forumite
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    It's not uncommon for people to take that view that avoiding tax is good and paying it is bad, but that's too simplistic, so it's generally more productive to look at how to maximise your net return, regardless of whether that comes from taxable or non-taxable accounts such as ISAs.
  • tony3619tony3619 Forumite
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    eskbanker said:
    It's not uncommon for people to take that view that avoiding tax is good and paying it is bad, but that's too simplistic, so it's generally more productive to look at how to maximise your net return, regardless of whether that comes from taxable or non-taxable accounts such as ISAs.
    Forgive me for being abit thick but why are ISAs tax free and how do they differ from normal savings accounts. 
  • RobM99RobM99 Forumite
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    The gains from an ISA whether cash or stocksand shares are all tax-free.
    Now a gainfully employed bassist.
  • Bigwheels1111Bigwheels1111 Forumite
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    tony3619 said:
    eskbanker said:
    It's not uncommon for people to take that view that avoiding tax is good and paying it is bad, but that's too simplistic, so it's generally more productive to look at how to maximise your net return, regardless of whether that comes from taxable or non-taxable accounts such as ISAs.
    Forgive me for being abit thick but why are ISAs tax free and how do they differ from normal savings accounts. 
    No tax, lower rates.
    Thats it.
  • eskbankereskbanker Forumite
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    tony3619 said:
    eskbanker said:
    It's not uncommon for people to take that view that avoiding tax is good and paying it is bad, but that's too simplistic, so it's generally more productive to look at how to maximise your net return, regardless of whether that comes from taxable or non-taxable accounts such as ISAs.
    Forgive me for being abit thick but why are ISAs tax free and how do they differ from normal savings accounts. 
    The whole point of ISAs is that they're tax-free, there's some explanation of the basics before identifying best buys at https://www.moneysavingexpert.com/savings/best-cash-isa/
  • Dazed_and_C0nfusedDazed_and_C0nfused Forumite
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    tony3619 said:
    eskbanker said:
    It's not uncommon for people to take that view that avoiding tax is good and paying it is bad, but that's too simplistic, so it's generally more productive to look at how to maximise your net return, regardless of whether that comes from taxable or non-taxable accounts such as ISAs.
    Forgive me for being abit thick but why are ISAs tax free and how do they differ from normal savings accounts. 
    With normal accounts the interest is all taxable income.

    Some may not be taxed if covered by the Personal Allowance.

    Some might be taxed at 0% courtesy of either the savings starter rate or savings nil rate but it's still taxable income and in some cases can increase your tax bill even when being taxed at 0%.  Tapered Personal Allowance and increased HICBC being two not unusual scenarios where this can happen.
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