Flexi to Easy Access savings account

ColdIron

20122013 said:

Eco_Miser said:

If you have a low income, the first £12570 of any income is tax-free. Then the next £5000 (Starting Rate for Savings) of interest is taxed at 0%, as is £1000 Personal Savings Allowance. You can also get £500 of dividends at 0% outside an ISA. Anything inside an ISA is of course exempt.

If you make £20,000 interest does that mean the first

£12750 tax free, then next 

£ 5000  is at 0% tax?

£ 1000 is at 0% tax?

then the remaining interest £1250 (£20,000 - £12750 - £5000 - £1000) will be taxed at 20%?

Well it's £12,570 not £12,750 so it's £1,430 not £1,250 but otherwise, if the interest is your only income then, yes

Read this

https://www.moneysavingexpert.com/savings/tax-free-savings/

slinger2

ColdIron said:

20122013 said:

Eco_Miser said:

If you have a low income, the first £12570 of any income is tax-free. Then the next £5000 (Starting Rate for Savings) of interest is taxed at 0%, as is £1000 Personal Savings Allowance. You can also get £500 of dividends at 0% outside an ISA. Anything inside an ISA is of course exempt.

If you make £20,000 interest does that mean the first

£12750 tax free, then next 

£ 5000  is at 0% tax?

£ 1000 is at 0% tax?

then the remaining interest £1250 (£20,000 - £12750 - £5000 - £1000) will be taxed at 20%?

Well it's £12,570 not £12,750 so it's £1,430 not £1,250 but otherwise, if the interest is your only income then, yes

Read this

https://www.moneysavingexpert.com/savings/tax-free-savings/

I'm wondering how many people are getting anything like £20k in taxable interest this year with zero other income. Not many I'd have thought.

ColdIron

slinger2 said:

ColdIron said:

20122013 said:

Eco_Miser said:

If you have a low income, the first £12570 of any income is tax-free. Then the next £5000 (Starting Rate for Savings) of interest is taxed at 0%, as is £1000 Personal Savings Allowance. You can also get £500 of dividends at 0% outside an ISA. Anything inside an ISA is of course exempt.

If you make £20,000 interest does that mean the first

£12750 tax free, then next 

£ 5000  is at 0% tax?

£ 1000 is at 0% tax?

then the remaining interest £1250 (£20,000 - £12750 - £5000 - £1000) will be taxed at 20%?

Well it's £12,570 not £12,750 so it's £1,430 not £1,250 but otherwise, if the interest is your only income then, yes

Read this

https://www.moneysavingexpert.com/savings/tax-free-savings/

I'm wondering how many people are getting anything like £20k in taxable interest this year with zero other income. Not many I'd have thought.

The OP is getting to grips with the principle, as explained in the MSE link. Walk before we run eh?

20122013

If there are two pots of the exact amount of money you can use to (1) buy shares (and hold for a minimum of 10  years) and (2) to deposit into some savings accounts, how would you decide on which pot to do what with ( to get the most out of them)?

The two pots :Cash ISA or Cash

I am thinking to use / transfer the cash ISA into S&S ISA as there will no CGT to pay on any gains?  as shares in general will make a better gain than cash. 
And then put the cash in a high interest account and pay tax on the interest earned when it goes over the tax free / personal allowance.

 

masonic

I'd consider the ISA wrapper more valuable for S&S, not only because of higher growth potential, but also it removes the need to keep records and do the necessary tax calculations, which can be complex and time consuming.

As a result I pay tax on some of my savings interest. I can live with that for a simpler life.

Eco_Miser

If you're going to buy shares, or OEICs or ETFs, do so in ISA as far as possible. Cash savings will probably have a lower return, and have a bigger 0% allowance unwrapped (up to £6000 compared with £500 for dividends) - that's in addition to the £12570 PA that's available for both if you don't have other income.