Where to save 300k? Interest earned to pay renting costs for OAP

Dazed_and_C0nfused

warranty said:

Dazed_and_C0nfused said:

warranty said:

JamesRobinson48 said:

How much State Pension does the person receive?

BTW, you might need to factor in the elderly relative's loss of certain means-tested state benefits once the £300k cash is received.

They are on a very low state pension of around 9.3k per year plus pension credit, they won't be entitled to pension credit once the house is sold

If that is their only taxable income, i.e. no other private or work pension income, then they can actually earn a decent amount in taxable interest before becoming liable to pay any tax.

The starting point is £18,570 so with £9.3k State Pension, which is actually 5.5% above the standard basic State Pension amount, they are looking at £9,270 in interest before owing any tax.

Wil be a little less from April as Personal Allowance remains the same but her State Pension will increase in the 2025-26 tax year.

NB.  The above assumes your £9.3k figure State Pension figure is correct and you have accidentally understated her State Pension by £775 by assuming it's paid monthly.

Thanks, the only other income is attendance allowance which I believe is not means tested - the pension is around £180 per week so I just multiplied by 52 for the annual figure - they currently receive pension credit but that will stop when the house is sold so I haven't included that in any figures. So their income when they move will be 9.3k annual state pension and 3.8k annual attendance allowance, approx 13.1k per year.

Attendance allowance isn't taxable so you can ignore that for tax purposes.  Same with pension credit.

warranty

Sarahspangles said:

Have you considered letting the house rather than selling? Acknowledging the risks and that not everyone is up for being a landlord.

Thanks, definitely not interested in letting the house - selling it will be stressful enough!

Albermarle

warranty said:

Thanks all, I believe that interest on the savings will be payable as the pension + interest will take them over the limit.

 

I would rather spread the savings over different financial institutions so as not to go over 85k, I don't see any reward in not doing so, only the very small risk that they could lose it all so just not worth it and as we have POA we have to act in their best interests.

I don't even know what an annuity is so will see what Google says about it, in my very unsophisticated mind I was thinking along the lines of 20k in an ISA before April, 20k in a new ISA after April, the rest split into different banks to ensure it's under 85k for the financial protection

That is the normal advice, even though very big institutions are unlikely to go under. On the other hand they are normally not the best paying interest accounts.

This is a good comparison table. Every provider listed is covered by the FSCS £85K , even though you will probably not have heard of some them. Some will be internet only and a few app only.
They list all types of easy access, notice and fixed rate accounts + Cash ISA's.
One tip is at the top right hand of each list you will see a box named 'sort' and in the box it will say 'provider links first'
This gives priority to the providers they get commission from .
To get a full list click on the box and select 'rate' 

poseidon1

warranty said:

Thanks all, I believe that interest on the savings will be payable as the pension + interest will take them over the limit.

 

I would rather spread the savings over different financial institutions so as not to go over 85k, I don't see any reward in not doing so, only the very small risk that they could lose it all so just not worth it and as we have POA we have to act in their best interests.

I don't even know what an annuity is so will see what Google says about it, in my very unsophisticated mind I was thinking along the lines of 20k in an ISA before April, 20k in a new ISA after April, the rest split into different banks to ensure it's under 85k for the financial protection

Addressing your ideas for savings and isa accounts and spreading the risk, worthwhile looking at Hargreaves Lansdown cash savings hub linked to various saving institutions , which now has  the added benefit of cash ISAs with similar links to appropriate banks. 

The hub, gives you a single point of entry for setting up multiple deposit and cash isa accounts which may be preferable to approaching different individual banks and building societies and navigating their POA formalities, not to mention managing multiple online logins and passwords! - see information from HL below re POA situations.

https://www.hl.co.uk/support/life-events/supporting-someone-else

At present, HLs linked saving institutions via the hub can offer fixed interest, instant access  and cash ISAs at interest rates up to 4.5%. These  are by no means the best rates out there, but the convenience factor for you the attorney might be worth sacrificing a couple of 'basis points'.

However I would point out that only their instant access accounts offer monthly interest payout options, so this maybe a deal breaker if you want/need monthly interest cashflow across all the different saving duration options.

warranty

Albermarle said:

warranty said:

Thanks all, I believe that interest on the savings will be payable as the pension + interest will take them over the limit.

 

I would rather spread the savings over different financial institutions so as not to go over 85k, I don't see any reward in not doing so, only the very small risk that they could lose it all so just not worth it and as we have POA we have to act in their best interests.

I don't even know what an annuity is so will see what Google says about it, in my very unsophisticated mind I was thinking along the lines of 20k in an ISA before April, 20k in a new ISA after April, the rest split into different banks to ensure it's under 85k for the financial protection

That is the normal advice, even though very big institutions are unlikely to go under. On the other hand they are normally not the best paying interest accounts.

This is a good comparison table. Every provider listed is covered by the FSCS £85K , even though you will probably not have heard of some them. Some will be internet only and a few app only.
They list all types of easy access, notice and fixed rate accounts + Cash ISA's.
One tip is at the top right hand of each list you will see a box named 'sort' and in the box it will say 'provider links first'
This gives priority to the providers they get commission from .
To get a full list click on the box and select 'rate' 

Thanks for your reply, I can't see a table or link though?

warranty

poseidon1 said:

warranty said:

Thanks all, I believe that interest on the savings will be payable as the pension + interest will take them over the limit.

 

I would rather spread the savings over different financial institutions so as not to go over 85k, I don't see any reward in not doing so, only the very small risk that they could lose it all so just not worth it and as we have POA we have to act in their best interests.

I don't even know what an annuity is so will see what Google says about it, in my very unsophisticated mind I was thinking along the lines of 20k in an ISA before April, 20k in a new ISA after April, the rest split into different banks to ensure it's under 85k for the financial protection

Addressing your ideas for savings and isa accounts and spreading the risk, worthwhile looking at Hargreaves Lansdown cash savings hub linked to various saving institutions , which now has  the added benefit of cash ISAs with similar links to appropriate banks. 

The hub, gives you a single point of entry for setting up multiple deposit and cash isa accounts which may be preferable to approaching different individual banks and building societies and navigating their POA formalities, not to mention managing multiple online logins and passwords! - see information from HL below re POA situations.

https://www.hl.co.uk/support/life-events/supporting-someone-else

At present, HLs linked saving institutions via the hub can offer fixed interest, instant access  and cash ISAs at interest rates up to 4.5%. These  are by no means the best rates out there, but the convenience factor for you the attorney might be worth sacrificing a couple of 'basis points'.

However I would point out that only their instant access accounts offer monthly interest payout options, so this maybe a deal breaker if you want/need monthly interest cashflow across all the different saving duration options.

Thanks, this looks very interesting - I was thinking about ISA's and fixed rate accounts so having it all under one roof would make it much easier

marycanary

warranty said:

The costs for the council accommodation will be around 1.2k per month, the aim being to pay for the bulk of the housing costs out of the interest from their savings. Family have POA for finances and health. As an aside

As an aside, £1.2k per month is a massive amount of rent for a council sheltered property. Does that include care costs? If you don't mind saying, where does your relative live? Please ignore this post if you wish, I don't want to be impertinent.

eskbanker

warranty said:

Albermarle said:

This is a good comparison table. Every provider listed is covered by the FSCS £85K , even though you will probably not have heard of some them. Some will be internet only and a few app only.
They list all types of easy access, notice and fixed rate accounts + Cash ISA's.
One tip is at the top right hand of each list you will see a box named 'sort' and in the box it will say 'provider links first'
This gives priority to the providers they get commission from .
To get a full list click on the box and select 'rate' 

Thanks for your reply, I can't see a table or link though?

Sounds like the reference should have been to this:

https://moneyfactscompare.co.uk/

xylophone

Don't forget her cash ISA allowance each year.  Some accounts pay monthly interest if that is required.


Various types of accounts in tables here

https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

warranty

marycanary said:

warranty said:

The costs for the council accommodation will be around 1.2k per month, the aim being to pay for the bulk of the housing costs out of the interest from their savings. Family have POA for finances and health. As an aside

As an aside, £1.2k per month is a massive amount of rent for a council sheltered property. Does that include care costs? If you don't mind saying, where does your relative live? Please ignore this post if you wish, I don't want to be impertinent.

It's classed as Extra Care sheltered accommodation and from what I can gather includes utilities for the accommodation and communal areas, this is South East.