The Old Regular Savers Discussion Thread 28/12/24-29/1/26

TheQuaker

I'm newish to this RS game. I've been doing it 3 months or so and have racked up 10 regular savers so far. I'd used up my ISA allowance before discovering this obsession. My concern is getting taxed and affectively doing all this work to affectively pay the tax man. I've 22k or so trickle feeding into these and I'm a lower rate tax payer. I'm also a Nationwide member so got one of those £100 payments. So I guess this limits my tax free allowance for savings interest to £900. The question is, do banks and building societies tell HMRC how much interest you've earned at the end of the tax year or when the Saver matures? This obviously will affect when I stop and maybe put some into an ISA after April. I need to do the numbers but want to avoid having to scrape back money from HMRC.

friolento

TheQuaker said:

I'm newish to this RS game. I've been doing it 3 months or so and have racked up 10 regular savers so far. I'd used up my ISA allowance before discovering this obsession. My concern is getting taxed and affectively doing all this work to affectively pay the tax man. I've 22k or so trickle feeding into these and I'm a lower rate tax payer. I'm also a Nationwide member so got one of those £100 payments. So I guess this limits my tax free allowance for savings interest to £900. The question is, do banks and building societies tell HMRC how much interest you've earned at the end of the tax year or when the Saver matures? This obviously will affect when I stop and maybe put some into an ISA after April. I need to do the numbers but want to avoid having to scrape back money from HMRC.

They report what they have paid you in a given tax year

wmb194

TheQuaker said:

I'm newish to this RS game. I've been doing it 3 months or so and have racked up 10 regular savers so far. I'd used up my ISA allowance before discovering this obsession.

My concern is getting taxed and affectively doing all this work to affectively pay the tax man.

I've 22k or so trickle feeding into these and I'm a lower rate tax payer. I'm also a Nationwide member so got one of those £100 payments.

So I guess this limits my tax free allowance for savings interest to £900.

The question is, do banks and building societies tell HMRC how much interest you've earned at the end of the tax year or when the Saver matures?

This obviously will affect when I stop and maybe put some into an ISA after April. I need to do the numbers but want to avoid having to scrape back money from HMRC.

Yes, they report interest received in a tax year to HMRC and then HMRC will alter your tax code to collect any tax. The only provider people are aware of that reports at the end of the term if the interest is inaccessible during the term is NS&I.

Usually it's better to think about maximising your gains after tax rather than always avoiding paying tax e.g., 7% is 5.6% net of 20% tax and is still better than most Isa accounts, 6% is 4.8% net at 20%.

TheQuaker

Usually it's better to think about maximising your gains after tax rather than always avoiding paying tax e.g., 7% is 5.6% net of 20% tax and is still better than most Isa accounts, 6% is 4.8% net at 20%.

Very true. Thanks for that. Makes me think having money in cash ISAs is not worth it if playing this game.

Kim_13

TheQuaker said:

I'm newish to this RS game. I've been doing it 3 months or so and have racked up 10 regular savers so far. I'd used up my ISA allowance before discovering this obsession. My concern is getting taxed and affectively doing all this work to affectively pay the tax man. I've 22k or so trickle feeding into these and I'm a lower rate tax payer. I'm also a Nationwide member so got one of those £100 payments. So I guess this limits my tax free allowance for savings interest to £900. The question is, do banks and building societies tell HMRC how much interest you've earned at the end of the tax year or when the Saver matures? This obviously will affect when I stop and maybe put some into an ISA after April. I need to do the numbers but want to avoid having to scrape back money from HMRC.

I do RS before ISA, so that I switch at the point that it would be better to use an ISA. The only ISA allowance I’ve used before then is speculatively opening accounts that might be useful later. I keep a spreadsheet with the running total of my interest for the tax year, currently at c. £720 and as you say including the Nationwide payments (£150 this year due to the £50 when the Virgin Money deal was confirmed.) I’ve also listed the interest due dates, as the accounts are going to pay interest in this tax year so the only thing I can do is to shift some of the money out if I think there will be too much at current levels of funding. 

Exceeding the £1,000 only makes you worse off if the extra interest pushes you into the higher rate tax bracket, thereby causing the PSA to fall to £500. So you should be monitoring your total taxable income rather than your interest to avoid this (if you don’t have them already, Premium Bonds would be the obvious place to put any savings if it were getting close, as like an ISA, they are tax free.) A 5% RS with no PSA left is a 4% RS after basic rate tax, which is still higher than the 3.6% median prize rate. But if you expected to run out of PSA every year, shifting a chunk into Premium Bonds might be good tax planning.

Interest starts to be reported once the tax year it was earned in has ended. They should have 24/25s by now but some posters have reported HMRC saying that the figures aren’t available yet.

surreysaver

TheQuaker said:

Usually it's better to think about maximising your gains after tax rather than always avoiding paying tax e.g., 7% is 5.6% net of 20% tax and is still better than most Isa accounts, 6% is 4.8% net at 20%.

Very true. Thanks for that. Makes me think having money in cash ISAs is not worth it if playing this game.

I use a flexible easy access ISA as a float, paying in maturing regular savers before using the float to pay next month's deposits 

TheQuaker

surreysaver said:

TheQuaker said:

Usually it's better to think about maximising your gains after tax rather than always avoiding paying tax e.g., 7% is 5.6% net of 20% tax and is still better than most Isa accounts, 6% is 4.8% net at 20%.

Very true. Thanks for that. Makes me think having money in cash ISAs is not worth it if playing this game.

I use a flexible easy access ISA as a float, paying in maturing regular savers before using the float to pay next month's deposits 

Good idea. I currently use a Chase account currently at 4.75% for a year, so good for now. Regarding the flex Easy access ISA, can you transfer none flex Cash ISAs into a flex cash isa?

friolento

TheQuaker said:

surreysaver said:

TheQuaker said:

Usually it's better to think about maximising your gains after tax rather than always avoiding paying tax e.g., 7% is 5.6% net of 20% tax and is still better than most Isa accounts, 6% is 4.8% net at 20%.

Very true. Thanks for that. Makes me think having money in cash ISAs is not worth it if playing this game.

I use a flexible easy access ISA as a float, paying in maturing regular savers before using the float to pay next month's deposits 

Good idea. I currently use a Chase account currently at 4.75% for a year, so good for now. Regarding the flex Easy access ISA, can you transfer none flex Cash ISAs into a flex cash isa?

Sure you can

where_are_we

Likewise, I am using my flexible EA cash ISA to fund more highly rated RS`s (even if I pay 20% tax on the interest) such that at the beginning of next April I will have to find a load of EA cash to temporarily top up my Flexible EA Cash ISA fully until the start of the next ISA year because I don`t want to lose the full ISA protection that it brings. If RS rates are still better than flexible EA cash ISA rates in the new ISA year I will carry on as before. It will be a nice problem to have as I didn`t envisage the great new RS rates that have materialised recently.
I believe it is a sensible strategy to keep as much of my assets under the ISA umbrella. Who knows what tax and ISA rules will change in the future. 

happybagger

happybagger said:

dibbles212 said:

Anyone part-way through an Issue 3? What is your plan of action?

Wait until my Issue 3 matures in January and if it's still available then, open it. Whilst keeping an occasional eye out in case they change the rule.

I messaged PBS on this expressing my 'disappointment', and the response is, they're sorry I'm disappointed, hard luck, "Once your current Rainy-Day Saver Account has matured, you will then be eligible to open the new issue."

No budging.