Tax on Savings

Molly4

Thank you @Dazed_and_C0nfused, @ColdIron @Sg28 for your help.

There is an old saying - "Look after the Pennies and the Pounds will take care of themselves."

At present every Penny counts and I am trying to make my Savings work better for me. 

ColdIron

Molly4 said:

There is an old saying - "Look after the Pennies and the Pounds will take care of themselves."

There's another old saying: Penny wise, pound foolish

I wouldn't put too much store in aphorisms or idioms

boingy

I've always thought "Sod the pennies, look after the pounds".

Sg28

Molly4 said:

Thank you @Dazed_and_C0nfused, @ColdIron @Sg28 for your help.

There is an old saying - "Look after the Pennies and the Pounds will take care of themselves."

At present every Penny counts and I am trying to make my Savings work better for me. 

One thing to consider is that you dont need the ISA. The one you have is a fairly decent rate at 5.45% but if you have only just opened the account and are in the cooling off period you could cancel this and move the money to a non ISA 1 year fix at around 6%. 

Its up to you whether or not you think its worth the hassle. Personally I'm lazy so probably wouldnt bother! 

Also maybe give it a week before opening a new savings account, just to allow todays interest rate increase to settle in. 

badger09

@Molly4

Take a look at this thread. Don’t be put off by the 40+ pages! It’s kept up to date so you only need to read page 1

Go down the list until you find an account that suits you as some are instant access, some easy access & some limited access. Some are also app only, which might not suit. 

Depending on how much you have saved & what your requirements are, you could open more than one. 

You might want to wait a few days as there is another BOE announcement in a couple of hours, interest rate predicted to rise again. 

Come back with any further questions & good luck 

https://forums.moneysavingexpert.com/discussion/6392978/top-easy-access-acs-ranked-top-of-the-pots-no-chat/p1

Molly4

@Sg28

Now I know that the NS&I account is taxable I will look into other options. 

@badger09 Thank you.

I will take a look. It's hard enough for me to keep track of all the Interest Rate changes but I'm not very clued up on when is the best time to move money around. I'm also a bit old fashioned in that if I have never heard of a Brand in this case a Bank I tend to avoid it. 

badger09

Molly4 said:

@Sg28

Now I know that the NS&I account is taxable I will look into other options. 

@badger09 Thank you.

I will take a look. It's hard enough for me to keep track of all the Interest Rate changes but I'm not very clued up on when is the best time to move money around. I'm also a bit old fashioned in that if I have never heard of a Brand in this case a Bank I tend to avoid it. 

That’s really not a problem. However, if you stick to just the high street names with a brick & mortar presence, you’re really restricting your choices. 

I’m early 70s & used to love the ‘game’ of chasing the highest rates & switching for bonuses, but I’ve reached the stage where I feel the need to simplify my finances. 

That doesn’t mean I’m prepared to leave my money stagnating, just that I don’t switch every few days for an extra 0.1%. I also have a couple of online or app only accounts, but realise they’re not for everyone. 

If you find an account which seems suitable, you can always post here for a ‘sense check’ or get opinions on usability. 

jimjames

Molly4 said:

Firstly I would like to know at what point do you start paying Income Tax on your Savings? 

For clarity and anyone else who might read the thread title, there is no tax on savings in the UK. There is potentially tax on the income generated from savings and investments depending on your personal tax situation and other income you receive from different sources.

Alex9384

Hi all!

Without reading through all the posts.. I'm on relatively low income of 25,000 per year (gross).
I'd like to deposit 23,000 savings to a fixed bond for 5 years, after which the balance will be around 30k. That means 7k profit. The Savings account I'm looking at doesn't pay out interest annually but instead compounds it and pays out at maturity. I have no other income. Should I expect to pay 20% tax on those 7k earned?

Dazed_and_C0nfused

Alex9384 said:

Hi all!

Without reading through all the posts.. I'm on relatively low income of 25,000 per year (gross).
I'd like to deposit 23,000 savings to a fixed bond for 5 years, after which the balance will be around 30k. That means 7k profit. The Savings account I'm looking doesn't pay out interest annually but instead compounds it and pays out at the end. I have no other income. Should I expect to pay 20% tax on those 7k earned?

Ultimately it depends on how the interest payer reports the interest.

If it credited to your account each year then it's likely to be reported like that to HMRC.

In which case the first £1,000 would be taxed at 0% and the remainder at 20%.

So say you got £1,400 in year 1 that would leave you with £80 tax to pay.