Saving for a Wedding!

callum2010x

I'm getting married in 18 months and want to have my money in the best place in order get as much interest on it as possible (obviously). The aim would be to save around £40k.

I currently have 11k savings in the Santander Easy Access Savings account (currently at 5.2% interest, though dropping in May).  I am a higher rate tax payer so I'm now looking at ISAs as I'm going to start being taxed on the interest I get... and the rate is dropping for this account anyway. 

I am thinking of keeping 10k in the Santander account then perhaps opening an ISA elsewhere to start putting the rest? Or would I be better off moving all 11k now before the tax year ends into an ISA.

The other issue, I suppose is that I am going to needing to be dipping into my savings over the next 18 months to pay things off bit by bit - so my money would need to be somewhere with I have relatively easy access.

Thoughts, opinions and suggestions welcome! 

Emmia

You really don't need to spend £40k on a wedding. That's actually nuts - it's one day.

elkiedee

Did the Santander account launch in September 2023? If you have no other savings, 5.2% interest on 11K for less than a year (until May, when it drops) will probably stay within your Personal Savings Allowance of £500 (for higher rate tax payers) - I make it that £11K in September would have earned between £300 and £400 by the time the rate drops, but it might still exceed your PSA even with 4 months at the lower rate if you keep it there, and if you  move it into an ISA later in the next tax year, you will use more of your PSA and you will use half of your ISA allowance.
So if you need to save another £29K (including interest and taking into account tax) in c 18 months (September 2025?), with 10K ISA allowance and a small proportion of your PSA left, you might have to pay more tax later on in the 2024/25 financial year.

As it's not in an ISA now, if you open a cash ISA this year you can presumably divide your savings between Santander and the new ISA in any proportion you like. You could open one this month that allows you a certain number of withdrawals a year and put between 1K and all 11K into it, and then open another ISA in April on similar terms - say one with 4 withdrawals with Coventry Building Society now and a Triple Access with Nationwide next year - that would give you up to 7 withdrawals within just over a year, plus you'd be able to make another 4 withdrawals from the Coventry account in the next 6 months. The Nationwide ISA money gets moved into a different ISA account and you'd have to choose another account for the rest of the time until the wedding (or you could transfer to Coventry at that point and keep it all together, or put it in an instant access ISA as presumably you'll have more wedding bills to deal with in the run up. These examples don't pay as much as Santander currently does, and there might be better such accounts on offer, and I think you'll have to make your own detailed calculations to work out what works out best in terms of interest earned and tax payable.