Savings & Tax

Thunderpants1817

I currently have approximately £50000 in premium bonds and am considering cashing in a putting it into my first direct savings account of 7% locked in for one year.

I am retired and do not pay tax on either as I am tax exempt on my war & service pension and the only other income I have is with a disability benefit, I am married and my wife is my carer.  I also do not have a mortgage as it was paid in full several years ago.

However as a result of injuries sustained in the Army my brain sometimes becomes overloaded and my cognitive thought processes become confusing.

My question is that will I have to pay tax on any interest earned, I know that my small disability benefit will count towards my yearly tax allowance but this is very small.

Any help appreciated.

ColdIron

The only 7% FD savings account is limited to £300 per month for 12 months

They do have a fixed term account at 5.60%

You have a £12,570 Personal Allowance which will probably cover the interest

Dazed_and_C0nfused

With only a small amount of pension income it's likely that you can have total taxable income of at least £17,310 before any tax would be payable.

But you can only add £300/month to First Directs regular saver.

Albermarle

putting it into my first direct savings account of 7% locked in for one year.

The current best one year fix is 6% - most are below that. First direct are offering 5.2%

Fixed Rate Savings Accounts | first direct
Best savings accounts: 5% easy access or 6.1% fixed rates (moneysavingexpert.com)