Saving options

Luxton28

Hi there,

What are people doing with their savings at the moment after you have used up your ISA allowance for the year and still have money left sat in savings accounts.
With the budget looming i am worried i will be taxed more on my savings and i am trying to keep my tax bill down.
The only option i can think is to buy premium bonds?
Any ideas would be appreciated.
Thanks

Albermarle

PBs are paying on average 3.6%, but in reality the figure is skewed by the Million Pound prizes and you will be more likely to get around 3.2% with average luck and assuming you have quite a decent amount with them.
The current best easy access accounts are paying 4.5% - so even if you pay 20% tax on that, it still works better.

Don't get obsessed about avoiding tax, look for the best result instead.

TheMilkmansDad

What Albemarle said.

Also worth looking at your current pension position. Without knowing your age and overall position financially not a lot else to add.

ColdIron

Pensions are always an option. Tax free until withdrawal and tax relief on top. For some people they can even reduce their tax bill by reducing the amount of 40% tax

Do you have a partner paying no tax? You can use the marriage allowance and even gift them money

It will depend on your circumstances and we don't know yours

Luxton28

Thanks for everyone's responses.

I'm in my early 40's with no partner, it's just me. I'm not wanting to go down the pension route as i want to use the money i'm saving to buy another house in the near future.

Archerychick

In that case look for your best return still which is likely to be Regular Savers, you can drip feed funds into these accounts each month, and you’ll earn more interest on the funds in those accounts rather than in say an easy access account. 

eskbanker

Archerychick said:

In that case look for your best return still which is likely to be Regular Savers, you can drip feed funds into these accounts each month, and you’ll earn more interest on the funds in those accounts rather than in say an easy access account. 

It depends on what OP means by needing the money "in the near future", as regular savers may not suit terms shorter than a year - the First Direct one, for example, only pays a derisory low rate instead of the advertised one if the money is accessed prior to maturity.

Albermarle

Luxton28 said:

Thanks for everyone's responses.

I'm in my early 40's with no partner, it's just me. I'm not wanting to go down the pension route as i want to use the money i'm saving to buy another house in the near future.

Hopefully you at least have a workplace pension.

Newbie_John

You can open fixed savings account for 6 months so the interests are paid in April next year - that way it will be tax free this financial year and you will use your next year limit.

Depending on your tax rate you also get CGT tax allowance, Dividend allowance.

You can buy gilts - more of a long game though.

Premium bonds are really like lottery, with £10k there is a chance, fairly high you'll get £0 till April, but if you higher tax rate then worth a shot.

jimjames

Luxton28 said:

With the budget looming i am worried i will be taxed more on my savings and i am trying to keep my tax bill down.

I'm not aware of any suggestions via leaks or speculation that there would be any tax introduced on savings. I equally can't see any changes to tax on interest as it's already taxable beyond £1000/£500. I suppose that might be scrapped but if ISA limit is reduced them I doubt that would change too.

InvesterJones

I agree with the comment about not worrying about avoiding tax, instead look at the best return and risk for your situation.

Since you may need the money soon then savings accounts, short term fixed rate savings, notice accounts, premium bonds and gilts are all good options IMHO. Gilts are most reliable when held to maturity, but in a falling rate environment there is often no harm in selling early (and if yields fall, might actually result in a higher rate/time than you locked in). I'm not a fan of premium bonds for very short term - you have less time for your luck to revert to median - so the volatility is quite high.