Where else can I save??

fidaa

After some advice please.

Put in max amount for this ISA tax year, have fully used up premium bonds allowance too.

I am a 40% tax payer so if I do put it into normal savings account any interest I earn will tip me over 100k income anyway so chip into my personal allowance.

Where else can I invest?

ColdIron

How is your pension provision? The tax relief is generous, especially for higher rate taxpayers

fidaa

ColdIron said:

How is your pension provision? The tax relief is generous, especially for higher rate taxpayers

I pay into a SIPP but towards end of.tax year only.

Have an employer pension on top

boingy

2 options:

1. Put it in your pension
2. Put it in the highest paying savings account you can find, pay the tax and be happy that you have that much money.

fidaa

boingy said:

2 options:

1. Put it in your pension
2. Put it in the highest paying savings account you can find, pay the tax and be happy that you have that much money.

With savings account first £1000 is tax free right?

But I am guessing if you did earn a £1000 it adds onto overall income?

ColdIron

fidaa said:

boingy said:

2 options:

1. Put it in your pension
2. Put it in the highest paying savings account you can find, pay the tax and be happy that you have that much money.

With savings account first £1000 is tax free right?

£500 for higher rate tax payers (it's not tax free, rather it's taxed at 0%)

But I am guessing if you did earn a £1000 it adds onto overall income?

Yes unlike pensions. Does your employer offer salary sacrifice? That could reduce it

Tom_Hendo

fidaa said:

boingy said:

2 options:

1. Put it in your pension
2. Put it in the highest paying savings account you can find, pay the tax and be happy that you have that much money.

With savings account first £1000 is tax free right?

But I am guessing if you did earn a £1000 it adds onto overall income?

You are nearly right. It does add to overall income, and if overall income is above the higher tax bracket income (just over £50k) then you only get £500 tax free rather than £1000 tax free (before paying the relevent tax, in this scenario 40%) 

Also if you earn less than 17.5K there are other personal limits that kick in before the £1000, just in case thats relevant. 

fidaa

ColdIron said:

fidaa said:

boingy said:

2 options:

1. Put it in your pension
2. Put it in the highest paying savings account you can find, pay the tax and be happy that you have that much money.

With savings account first £1000 is tax free right?

£500 for higher rate tax payers (it's not tax free, rather it's taxed at 0%)

But I am guessing if you did earn a £1000 it adds onto overall income?

Yes unlike pensions. Does your employer offer salary sacrifice? That could reduce it

So if I earn 98k and get £500 interest from bank saving it becomes 98.5k? And I get taxed 40% on the £500?

fidaa

Tom_Hendo said:

fidaa said:

boingy said:

2 options:

1. Put it in your pension
2. Put it in the highest paying savings account you can find, pay the tax and be happy that you have that much money.

With savings account first £1000 is tax free right?

But I am guessing if you did earn a £1000 it adds onto overall income?

You are nearly right. It does add to overall income, and if overall income is above the higher tax bracket income (just over £50k) then you only get £500 tax free rather than £1000 tax free (before paying the relevent tax, in this scenario 40%) 

Also if you earn less than 17.5K there are other personal limits that kick in before the £1000, just in case thats relevant. 

What you mean about 17.5k

Is it not 12.5k?

Sarahspangles

A couple can have two lots of premium bonds plus two sets of ISA, personal tax and personal savings allowances. But if you’re single, coupling up just for tax purposes is a bit extreme.

ColdIron

fidaa said:

ColdIron said:

fidaa said:

boingy said:

2 options:

1. Put it in your pension
2. Put it in the highest paying savings account you can find, pay the tax and be happy that you have that much money.

With savings account first £1000 is tax free right?

£500 for higher rate tax payers (it's not tax free, rather it's taxed at 0%)

But I am guessing if you did earn a £1000 it adds onto overall income?

Yes unlike pensions. Does your employer offer salary sacrifice? That could reduce it

So if I earn 98k and get £500 interest from bank saving it becomes 98.5k?

Yes

And I get taxed 40% on the £500?

You get taxed 0% on the first £500 (your Personal Savings Allowance) and 40% on any excess