Savings, interest and tax

somerset_phil

I've recently retired and have non-isa savings of approx £100k. I am getting taxed on my interest cos over the £1000 personal allowance. Should I be re-organising my finances to ensure I don't exceed the £1000 allowance or just accept that I'm gonna be taxed every year? 

DRS1

I'll bite.

Why isn't that 100k in an ISA?

wmb194

somerset_phil said:

I've recently retired and have non-isa savings of approx £100k. I am getting taxed on my interest cos over the £1000 personal allowance. Should I be re-organising my finances to ensure I don't exceed the £1000 allowance or just accept that I'm gonna be taxed every year?

What do you mean? Not earn interest to avoid tax? Surely 80% of something is better than nothing? I'd try to maximise my net return.

Cisco001

Have you utilise cash ISA allowance?
alternative I could think of is Premium bond to try the luck...

Rodders53

somerset_phil said:

Should I be re-organising my finances to ensure I don't exceed the £1000 allowance or just accept that I'm gonna be taxed every year? 

Yes.

Whichever you choose.

eskbanker

somerset_phil said:

I've recently retired and have non-isa savings of approx £100k. I am getting taxed on my interest cos over the £1000 personal allowance. Should I be re-organising my finances to ensure I don't exceed the £1000 allowance or just accept that I'm gonna be taxed every year? 

As above, trying to avoid tax for the sake of it may be completely counterproductive if it results in lower net income, but if your reference to 'non-ISA savings' implies that you also have ISA savings then you might wish to consider your situation in the round, and in particular whether having so much in cash deposit form is appropriate for your needs, or whether it may make sense to be investing, standalone or via pensions?

youngretired

It also depends on your retirement income. As if you are under your personal allowance then you will also have your £5000 savings starter rate before you use your £1000 personal savings allowance.

Dazed_and_C0nfused

youngretired said:

It also depends on your retirement income. As if you are under your personal allowance then you will also have your £5000 savings starter rate before you use your £1000 personal savings allowance.

Good point.  Or just above it and they would have some of the £5,000 to use first.

20122013

Cisco001 said:

Have you utilise cash ISA allowance?
alternative I could think of is Premium bond to try the luck...

I have read a few times that (for a basic tax payer), if they have maxed out their cash ISA allowance, Premium Bond may be a good alternative.  Is there a reason why not to put it in a savings account to earn some interest even if it is going to be taxed (or invest it)? is it because the PB has no tax / CGT and the win maybe more?  

With S&S, you will not get tax until you selll and make a gain?  

eskbanker

20122013 said:

Cisco001 said:

Have you utilise cash ISA allowance?
alternative I could think of is Premium bond to try the luck...

I have read a few times that (for a basic tax payer), if they have maxed out their cash ISA allowance, Premium Bond may be a good alternative.  Is there a reason why not to put it in a savings account to earn some interest even if it is going to be taxed (or invest it)? is it because the PB has no tax / CGT and the win maybe more?

Premium bonds are sometimes suggested as an alternative to taxable cash savings, as the winnings are indeed tax-free, albeit variable, so they have their place, especially for higher rate taxpayers who've used their ISA allowance.  However, as above, it's typically better to look at maximising net income rather than minimising tax as such, as these are often different....