ISAs and Premium bonds - help!

rubysparkles

Albermarle said:

EthicsGradient said:

Looking at just the prizes you stand a realistic chance of winning (up to and including £500), the Premium Bond yield is 4% - see https://www.lemonfool.co.uk/viewtopic.php?t=41434#p629736 , and you'd have to hold £20k in them for about 6 years to have a 50:50 chance of a £500 prize (without that, yield is 3.72% - still, for a higher rate payer, better than a taxed account).

Your £500 of interest on which you pay 0% tax equates to nearly £10,000 in the best non-ISA account (over 5%, with instant access) - it's probably worth keeping your emergency money in one of those next tax year (this year's allowance is, I guess, mostly used with the low interest ones you already have).

As ColdIron says, pensions are good for higher rate payers - if you're too old for a LISA, the minimum age to withdraw from a SIPP may not be that far off, so you might not be tying the money up for that long.

If you don't use a SIPP, you could consider opening the S&S ISA this tax year, and putting some of this year's £20k allowance into it, to give you a bit more "to play with" (though you might just use a "virtual portfolio" somewhere without real money if you want to get used to things. Unless you think you'll enjoy trying to pick stocks, though, I'd advise starting out with simple index trackers).

Getting at least £30k into either ISAs or a SIPP in this and the start of next tax year does seem a good idea, anyway.

Good advice but worth noting that the OP has a workplace pension, so probably easier just to add more money to that, rather than opening a separate SIPP.

OP - 40% tax relief on pension contribution is a very generous tax benefit from the Government, so not to be sniffed at .

Thanks so much to you and others for advice about tax relief, which I had no idea about. I've spent some time researching this area and it does seem important to take advantage of the relief, as it were. 

Archerychick

rubysparkles said:

Albermarle said:

EthicsGradient said:

Looking at just the prizes you stand a realistic chance of winning (up to and including £500), the Premium Bond yield is 4% - see https://www.lemonfool.co.uk/viewtopic.php?t=41434#p629736 , and you'd have to hold £20k in them for about 6 years to have a 50:50 chance of a £500 prize (without that, yield is 3.72% - still, for a higher rate payer, better than a taxed account).

Your £500 of interest on which you pay 0% tax equates to nearly £10,000 in the best non-ISA account (over 5%, with instant access) - it's probably worth keeping your emergency money in one of those next tax year (this year's allowance is, I guess, mostly used with the low interest ones you already have).

As ColdIron says, pensions are good for higher rate payers - if you're too old for a LISA, the minimum age to withdraw from a SIPP may not be that far off, so you might not be tying the money up for that long.

If you don't use a SIPP, you could consider opening the S&S ISA this tax year, and putting some of this year's £20k allowance into it, to give you a bit more "to play with" (though you might just use a "virtual portfolio" somewhere without real money if you want to get used to things. Unless you think you'll enjoy trying to pick stocks, though, I'd advise starting out with simple index trackers).

Getting at least £30k into either ISAs or a SIPP in this and the start of next tax year does seem a good idea, anyway.

Good advice but worth noting that the OP has a workplace pension, so probably easier just to add more money to that, rather than opening a separate SIPP.

OP - 40% tax relief on pension contribution is a very generous tax benefit from the Government, so not to be sniffed at .

Thanks so much to you and others for advice about tax relief, which I had no idea about. I've spent some time researching this area and it does seem important to take advantage of the relief, as it were. 

It really is, if you don't need the funds for something ahead of being access the pension. I have been pushing enough into mine to avoid paying the 40% tax on earnings, also means that for savings that I have in non ISA accounts I keep my £1k personal savings allowance for interest earnt. 

I would definitely make use of this years ISA allowance between now and end of March though.

poseidon1

Archerychick said:

rubysparkles said:

Albermarle said:

EthicsGradient said:

Looking at just the prizes you stand a realistic chance of winning (up to and including £500), the Premium Bond yield is 4% - see https://www.lemonfool.co.uk/viewtopic.php?t=41434#p629736 , and you'd have to hold £20k in them for about 6 years to have a 50:50 chance of a £500 prize (without that, yield is 3.72% - still, for a higher rate payer, better than a taxed account).

Your £500 of interest on which you pay 0% tax equates to nearly £10,000 in the best non-ISA account (over 5%, with instant access) - it's probably worth keeping your emergency money in one of those next tax year (this year's allowance is, I guess, mostly used with the low interest ones you already have).

As ColdIron says, pensions are good for higher rate payers - if you're too old for a LISA, the minimum age to withdraw from a SIPP may not be that far off, so you might not be tying the money up for that long.

If you don't use a SIPP, you could consider opening the S&S ISA this tax year, and putting some of this year's £20k allowance into it, to give you a bit more "to play with" (though you might just use a "virtual portfolio" somewhere without real money if you want to get used to things. Unless you think you'll enjoy trying to pick stocks, though, I'd advise starting out with simple index trackers).

Getting at least £30k into either ISAs or a SIPP in this and the start of next tax year does seem a good idea, anyway.

Good advice but worth noting that the OP has a workplace pension, so probably easier just to add more money to that, rather than opening a separate SIPP.

OP - 40% tax relief on pension contribution is a very generous tax benefit from the Government, so not to be sniffed at .

Thanks so much to you and others for advice about tax relief, which I had no idea about. I've spent some time researching this area and it does seem important to take advantage of the relief, as it were. 

It really is, if you don't need the funds for something ahead of being access the pension. I have been pushing enough into mine to avoid paying the 40% tax on earnings, also means that for savings that I have in non ISA accounts I keep my £1k personal savings allowance for interest earnt. 

I would definitely make use of this years ISA allowance between now and end of March though.

For a few years, I used salary sacrifice into my Sipp ( instead of annual salary increases). My employer was kind enough to also contribute their employer's national insurance savings on the sacrifice into my sipp. All helped to turbo charge what was a pretty small pension pot from outset.