Advice on savings

Listless_2

Hi

Looking for advice without being too specific. I have around 12k in savings between savings accounts and ISA. The ISA rate is now pretty bad and my savings bank of choice has also slipped down the ladder so I’m looking to move funds around to maximise interest gains.

Should I take the money from the ISA and put it into savings accounts?

Secondly, should I split the savings across multiple companies for safety and to benefit from sign up rewards or is this pointless? 

Thanks 

eskbanker

The best approach would generally be to use whichever account gives the best net return - at £12K it's unlikely that you'd pay tax on savings interest, so you probably don't need to be using the ISA wrapper, and could shift your money back into it later if the situation changed to the extent of it being beneficial.

No need to split across multiple companies for safety, but you might want to lock some away in a better-paying fixed-term account, and keep the rest in an easy access one, but much will depend on when you anticipate needing to access the money....

Listless_2

Thank you.

Am I correct in assuming interest accrued from my banks regular saver and instant saver accounts also counts towards the 1k tax free allowance?

eskbanker

Listless_2 said:

Am I correct in assuming interest accrued from my banks regular saver and instant saver accounts also counts towards the 1k tax free allowance?

The £1K personal savings 'allowance' is actually a nil-rate band, i.e. it applies to income that's taxable but taxes at 0%, and yes, all interest (from non-ISA accounts) is measured against it.  Does your use of 'also' signify that you regard the regular saver and instant saver accounts as separate from the savings accounts mentioned earlier, as I took your comment at face value about having £12K in savings?

Bigwheels1111

I only see two choices, a fixed interest account, 1,2,3,4, or 5 years and interest paid away annually.
Or a fixed and an easy access account with some put aside as an emergency fund.
Tandem for easy access is the top payer as of today at 5%. You sign up and use a top up bonus to get that rate.
Deposits and withdrawals take about 20 minutes with open banking.

https://www.tandem.co.uk/save/iasa

Here is a list of easy access, select rate order. Tandem is not top because it does not show the bonus.
https://moneyfactscompare.co.uk/savings-accounts/easy-access-savings-accounts/?quick-links-first=false

As for fixed rates. Select how many years, rate order, view further details.
You’re looking for paid annually and can be paid away.
Then you a not hit wait a tax bill on say 3 year interest in one go at the end.

https://moneyfactscompare.co.uk/savings-accounts/fixed-rate-bonds/?quick-links-first=false

Qyburn

Listless_2 said:

Should I take the money from the ISA and put it into savings accounts?

Probably not, unless  it's a Flexible ISA. If it is flexible, you can withdraw and put the cash into a higher rate savings account, then pop it back into the ISA just before the end of the tax year to preserve your allowance.

Another option to preserve your allowance would be to open a new ISA of your choice, and transfer in the old poor paying one. 

toby3210

Also consider a stocks and share ISA?

sheslookinhot

toby3210 said:

Also consider a stocks and share ISA?

I think that would be a bad idea if the OP needs advice on how best to save £12k.

Listless_2

eskbanker said:

Listless_2 said:

Am I correct in assuming interest accrued from my banks regular saver and instant saver accounts also counts towards the 1k tax free allowance?

The £1K personal savings 'allowance' is actually a nil-rate band, i.e. it applies to income that's taxable but taxes at 0%, and yes, all interest (from non-ISA accounts) is measured against it.  Does your use of 'also' signify that you regard the regular saver and instant saver accounts as separate from the savings accounts mentioned earlier, as I took your comment at face value about having £12K in savings?

Yes I did not include them in the 12k as this money sits in my current account. Honestly I didn’t really think about it for this reason 

I do not believe the total interest from all would exceed 1k per year but if this was to be the case how exactly do ‘they’ know?

eskbanker

Listless_2 said:

eskbanker said:

Listless_2 said:

Am I correct in assuming interest accrued from my banks regular saver and instant saver accounts also counts towards the 1k tax free allowance?

The £1K personal savings 'allowance' is actually a nil-rate band, i.e. it applies to income that's taxable but taxes at 0%, and yes, all interest (from non-ISA accounts) is measured against it.  Does your use of 'also' signify that you regard the regular saver and instant saver accounts as separate from the savings accounts mentioned earlier, as I took your comment at face value about having £12K in savings?

Yes I did not include them in the 12k as this money sits in my current account. Honestly I didn’t really think about it for this reason 

I do not believe the total interest from all would exceed 1k per year but if this was to be the case how exactly do ‘they’ know?

Banks and building societies report interest payments to HMRC, so they tot it all up and make adjustments to your PAYE tax code to collect unpaid tax if necessary.

If you have less than £20K in savings then you can get all of it within the ISA wrapper instantaneously if you wished, as it's less than one year's annual allowance, but if you have more than £20K then you don't have that luxury.

Listless_2

To complicate matters I have two ISA at present but one is wider family and one is my own. Neither opened this financial year. I’d like to move both to new accounts with better interest but I don’t want to merge them. However I believe it’s only possible to open one per year so I would have to keep one in an Isa with a worse rate unless I merged them together?