NS&I Green Savings Bond

DRS1

eskbanker said:

Kim_13 said:
A pension of £9K would mean that £3,570 (unused personal allowance) + £5,000 (Starter Savings Band) + £1,000 (Personal Savings Allowance) of interest wouldn't have any tax taken off, assuming those allowances are all unchanged in the budget.

DRS1 said:

But is the taxman going to grab any of it?  You have your personal allowance, the starter rate for savings and the personal savings allowance.  How much of that lot have you used up? And when the NS&I bonds pay out in 26/7 how much of that interest is actually going to be taxed at 20%? Maybe half of it?

The (up to) £5K starter band only applies to those with less than £18,570 of taxable income, including the savings interest, i.e. someone with total taxable income of, say, £19K would only have the £12,570 personal allowance and the £1K personal savings allowance applied to interest.

I thought it was "other income" which reduced the starter rate not savings income.  See here
Tax on savings interest: How much tax you pay - GOV.UK

BooJewels

That's my understanding too @DRS1 I've just done my tax return and got the difference between my PA and interest declared 'taxed at 0% under the Starting Rate'.  My PSA never came into it as the numbers weren't that big, but I could have earned interest up to the rest of my Starting Rate and 1k PSA before tax would have been payable.  

So the lady with the Green Bonds would have her 9k pension out of her PA, then the 18k+ interest out of the rest of her PA (3,570), then £5k of Starting Rate and £1k of PSA (=£18,570 total allowances).  So she'd end up paying something like £1,818 of tax on the balance of £9,093.

Incidentally, it's the 'Starting Rate' not 'Starter Rate' - so a pound in the swear box for everyone who perpetually mis-names it - which is odd, considering how many pedants there are in this place.

I think this is one of the things Rachel may fiddle with this week - removing or reducing the Starting Rate - I think the amount and type of people it will impact won't make headlines.

Want2BeDebtFree

Hi there: WMB194

Thanks yes,  CHASE BANK pay each month. I wasn't aware of that till last month when I saw the first lot of  interest,

and also:  WMB194

you mention GILTS..  Omg I have watched SO MANY YouTube Vids about investing in GILTS and I cannot get my head around them as they are SO confusing?  I WISH they were easier to understand.    I am on a learning curve;  so I think I need to watch a few more YouTube video's about investing in GILTS before I go ahead so I know what I am doing.  Thank you for those Codes, which I shall look into this afternoon ... Its very hard when you have been through a bereavement (and when you reach my age) to fully understand new things (like GILTS)... So I might do it slowly to begin with.. Just put £100 quid one of them and see what happens?  But I NEED to STUDY how they work on YouTube a heck of a lot more... 

Hi there KIM_13

No I don't have a "STOCKS & SHARES ISA" as I'm worried about risk.

Also Kim, No, the NS&I bonds are not joint with my hubby.  They are in my name,  (we did not know you

could get "Joint" NS&I bonds..  And also Kim_13 - wow thanks so much for the tip about moving any money

from CHASE BANK  to an account that pays interest annually instead, (as this would take it into 2027/28 to pay less tax as per the three years worth of interest for 4 NS&I bonds being paid all at once in that year

ColdIron

Hi there ColdIron.  Well no;  I only have my Company Pension at present. It is only £9K per year. I do

not get my State Pension for a number of years yet.  I don't fully understand how these private pensions work as yet, as its early days for me... Is it worth setting up a pension at almost 60 years old? LOL might only live for another 15yrs?  Who knows? 

Eskbanker:

Hi there!  Thanks... Good advice!  It just that I paid SO MUCH inheritance tax when Mum died, bless her heart,  that  why should this government get any more off me? Not to mention 36 years of paying income tax when I worked full time. Also,  I am still having bereavement counselling.  And I have  mistrust of this

government. To be honest,  I don't think they spend our Tax wisely. 

BooJewels

Hi there BooJewels x

Exactly!  I am dreading 26th October,  with what Rachel might potentially be doing... And yes

"fidding" is the right word...    

I must say... Thank you to everyone on this site... You are all so kind. I feel a bit less stressed now  xx

eskbanker

DRS1 said:

eskbanker said:

Kim_13 said:
A pension of £9K would mean that £3,570 (unused personal allowance) + £5,000 (Starter Savings Band) + £1,000 (Personal Savings Allowance) of interest wouldn't have any tax taken off, assuming those allowances are all unchanged in the budget.

DRS1 said:

But is the taxman going to grab any of it?  You have your personal allowance, the starter rate for savings and the personal savings allowance.  How much of that lot have you used up? And when the NS&I bonds pay out in 26/7 how much of that interest is actually going to be taxed at 20%? Maybe half of it?

The (up to) £5K starter band only applies to those with less than £18,570 of taxable income, including the savings interest, i.e. someone with total taxable income of, say, £19K would only have the £12,570 personal allowance and the £1K personal savings allowance applied to interest.

I thought it was "other income" which reduced the starter rate not savings income.  See here
Tax on savings interest: How much tax you pay - GOV.UK

Sorry, yes, you're right, my mistake.

eskbanker

Want2BeDebtFree said:

Eskbanker:

Hi there!  Thanks... Good advice!  It just that I paid SO MUCH inheritance tax when Mum died, bless her heart,  that  why should this government get any more off me? Not to mention 36 years of paying income tax when I worked full time. Also,  I am still having bereavement counselling.  And I have  mistrust of this

government. To be honest,  I don't think they spend our Tax wisely.

I don't suppose anyone enjoys paying tax, and likewise most will have opinions about how it's spent, but the point was really that it's generally counter-productive to let that get in the way of your own saving objectives - personally I'd prefer to earn £80 net after the government gets £20 rather than, say, £75 from an inferior account that happened to be tax-free (if they were the only two options available in a hypothetical scenario!).

Eco_Miser

Want2BeDebtFree said:

and also:  WMB194

you mention GILTS..  Omg I have watched SO MANY YouTube Vids about investing in GILTS and I cannot get my head around them as they are SO confusing?  I WISH they were easier to understand.    I am on a learning curve;  so I think I need to watch a few more YouTube video's about investing in GILTS before I go ahead so I know what I am doing.  Thank you for those Codes, which I shall look into this afternoon ... Its very hard when you have been through a bereavement (and when you reach my age) to fully understand new things (like GILTS)... So I might do it slowly to begin with.. Just put £100 quid one of them and see what happens?  But I NEED to STUDY how they work on YouTube a heck of a lot more... 

Hi there KIM_13

No I don't have a "STOCKS & SHARES ISA" as I'm worried about risk.

Eskbanker:

Hi there!  Thanks... Good advice!  It just that I paid SO MUCH inheritance tax when Mum died, bless her heart,  that  why should this government get any more off me? Not to mention 36 years of paying income tax when I worked full time. Also,  I am still having bereavement counselling.  And I have  mistrust of this

government. To be honest,  I don't think they spend our Tax wisely. 

A "STOCKS & SHARES ISA" can hold (and protect from income tax and capital gains tax) a lot more than just Stocks and Shares, including Gilts. (There are various threads on here discussing Gilts and similar fixed interest investments.)

All 'investments' have risk, including stuffing your mattress with cash, and putting your money in the bank. In those two cases the primary risk is that you lose more to inflation than you gain in interest.

Over periods of more than 10 years, diversified equities (another name for Stocks and Shares) have in the past 100+ years had better returns than gilts or cash in the bank.  

 See https://monevator.com/category/investing/passive-investing-investing/ for an introduction to investing in equities - and keep following the internal links to find lots about all kinds of investing.

And no government spends all of our tax wisely, but they do usually manage to keep the lights on and the hospitals and schools open and public transport running (not necessarily on time).