Savings advice/help!!!

Hi I’ve had £20000 in a fixed rate savings that just matured and earned £850 in interest and withdrew back into my savings account with my bank.
I already had £7500 in there since opening in September at a rate of 5.08% and now I’m looking for the best way to save with paying less tax on my interest for the coming year.
I’m aware I’ll probably have gone over my tax allowance this tax year so I thought putting in a fixed rate cash ISA for one year would avoid this but looking into this I think I can only put in £20000 to avoid tax again. Any advice to get the best out of my money without paying a lot or any tax at all. 
Thanks in advance! Daz.

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  • Janie2008
    Janie2008 Posts: 255
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    edited 7 January at 11:31AM
    Yes you can only pay in £20000 now but you can pay the rest into another isa after the new tax year in April. Rates on savings accounts seem to be going down by the day at the moment so I would act now if you see something suitable. You could just put it in an instant access isa as the rates are similar to one year fixes. 
  • eskbanker
    eskbanker Posts: 29,776
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    Dzza187 said:
    Any advice to get the best out of my money without paying a lot or any tax at all. 
    Usual advice on here is to focus on maximising your net return rather than trying to minimise tax as such - it's impossible to be definitive about what would work best for you without more details of your income, tax situation, allowances, etc, but 80% of a good rate will often beat 100% of a poorer one, and in many cases the net component of interest from a taxable account will be more than 80%....
  • Archerychick
    Archerychick Posts: 177
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    edited 7 January at 1:55PM
    Dzza187 said:
    Hi I’ve had £20000 in a fixed rate savings that just matured and earned £850 in interest and withdrew back into my savings account with my bank.
    I already had £7500 in there since opening in September at a rate of 5.08% and now I’m looking for the best way to save with paying less tax on my interest for the coming year.
    I’m aware I’ll probably have gone over my tax allowance this tax year so I thought putting in a fixed rate cash ISA for one year would avoid this but looking into this I think I can only put in £20000 to avoid tax again. Any advice to get the best out of my money without paying a lot or any tax at all. 
    Thanks in advance! Daz.
    Always maximise your tax free allowance - so make sure you’ve paid in £20k to your ISA by the end of the tax year.

    without knowledge about any other savings and income it’ll be hard to give other advice but based on what you’ve mentioned, you shouldn’t go over your PSA if you’ve put the rest into an instant access savings account. Although if you don’t need access to it it might be worth another fix especially with rates starting to decline 
  • Tom_Hendo
    Tom_Hendo Posts: 83
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    edited 7 January at 9:52PM
    I took the option to take out a Barclays Flexible ISA 1 year (Mine is 5.2% but I think current is 4.75%). Its not best on market for 'fixed' rates at the moment, but you can add to it in April up to the full new 20K allowance, and add to it at any point (So keep toppign it up until it matures, as long as you dont exceed £20K allowance).

    The other benefit is if you need money in an emergency, you can withdraw 10% up to 3 times a year without penalty. 
  • Dzza187
    Dzza187 Posts: 5
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    Thanks for the advice. I’m thinking of putting the 20k into a 1 year fixed cash ISA. At the end of that year if their rate drops can you switch to another ISA and withdraw just your interest earned and if so would that become taxable or do you have to keep it all in an ISA to avoid the tax? Thanks 
  • refluxer
    refluxer Posts: 2,523
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    edited 9 January at 9:24AM
    Dzza187 said:
    Thanks for the advice. I’m thinking of putting the 20k into a 1 year fixed cash ISA. At the end of that year if their rate drops can you switch to another ISA and withdraw just your interest earned and if so would that become taxable or do you have to keep it all in an ISA to avoid the tax? Thanks 
    Yes, you can transfer the ISA to another ISA (either with the same or a different provider) when the fixed rate is up, to get a better rate. This is usually necessary with fixed rate ISAs, as most default to an easy access ISA with a very low rate.

    If you don't need the interest, it's often a good option to keep it within the ISA as this allows the amount of money shielded from tax to grow.

    If you do withdraw the interest, that in itself won't be subject to tax but any interest earned from that money going forward will be.
  • Dzza187
    Dzza187 Posts: 5
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    That’s great thanks for clearing that up,I appreciate your help👍🏼
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