Maximising interest and the personal savings allowance

RipleyG

millymollymandy73 said:

If you become a 40% tax payer then both Natwest and Coop interest rates will effectively be lower than the one on your ISA.  

Do you know how much lower/ how I can work this out?

You'll need to first work out what interest you expect to earn in total - only count income in the month when you can actually withdraw/access it.

To calculate the net interest you'd get as 40% tax payer, subtract £500 (your tax free savings allowance) from the total interest, then multiply the remaining amount by 0.6 - add that number back to £500 and that's the interest you'll earn after tax. 

Compare that to the equivalent for a 20% tax payer - subtract £1000, multiply the remaining amount by 0.6, add that number back to £1000.

Do you have a salary sacrifice pension arrangement? If so, check whether the payments you make to that bring your adjusted income back into the 20% bracket. If you are in salary sacrifice and they don't , you could consider increasing your pension payments so that it does. That was you'd be saving both tax and NI contributions on the payment amount, as well as keeping your £1000 savings interest allowance. 

No I have a Scottish NHS pension and this does not seem to be an option, but thank you

I'm not familiar with your scheme, but that surprised me given you mention the NHS. A quick Google search suggests it might well be an option (threw up various member comms from the scheme, and some BMA references). If you aren't 100% certain then worth checking with your HR team - paying the money into your pension through salary sacrifice is likely to be substantially better as an option than any of the savings accounts you've mentioned: keep you out of the higher tax bracket, save you the income tax, save the 8% NI, etc etc. 

millymollymandy73

legasov said:

millymollymandy73 said:

I can afford to max all of these out, but it doesn't make sense to if I am going to go over the personal savings allowance. I have a Trading 212 Cash ISA at 4.78% for anything over that. 

4.78% for full 12 months or just for 90 days?

It's 4.78% for 12 months, I'm a couple of months in