5k savings options

spdavies

Hi all.
I'm a top rate tax payer. All my savings are currently tied up in a work placed shares scheme and i'm looking to diversify to spread the risk of any potential crash and to make sure i have access to the cash to fund university fees from next year.

I am planning to sell circa 5-10K shares and looking where best to invest it. Do i need a savings account, cash isa or something else. I am happy to limit withdrawals to a few times per year if that helps bump the rate up.

i've just done the MSE savings picker and i think it suggests an easy access chase account is best for me with rates of 4.5%. I just wanted to check thats correct wrt the tax situation and not needing an ISA. This would be my only 'non-shares' savings.

Welcome thoughts and direction please.

Ozzig

As you're a top-rate taxpayer, if you haven't already used your ISA allowance, I'd suggest an easy access ISA to start with.

la531983

I assume that Chase 4.5% is a time limited new customer offer because its absolutely nowhere what I am being offered as an existing one (2.25% !!!!!)

refluxer

la531983 said:

I assume that Chase 4.5% is a time limited new customer offer because its absolutely nowhere what I am being offered as an existing one (2.25% !!!!!)

Yes - the current boosted Saver rate is for new customers only, but they do offer boosted rates to existing savers occasionally.

It's nearly 4 years since I joined Chase and I'd say I've had a Saver account with a competitive rate for a decent proportion of that time (not at the moment though).

redpete

If you are likely to want access to the money within 5 years and don't want to risk losing some of it just as you want to use it, then savings is more appropriate than investing.

At the moment ISA rates are comparable with non-ISA accounts, so IMHO you might as well protect the interest from tax in an ISA (now and ongoing). This forum has a couple of threads on best current rates. ISAs here  and best non-ISAs article here.

Note that some of the best rates have short-term bonuses, including Chase (for new customers).

spdavies

redpete thanks. Am i right in saying that even though i'm a high band tax payer, i will only get tax on the amount of interest earned, therefore ISA not essential?

mebu60

spdavies said:

redpete thanks. Am i right in saying that even though i'm a high band tax payer, i will only get tax on the amount of interest earned, therefore ISA not essential?

You will have a £500 allowance so even at the max £10k saved your interest would be within that if it is your only savings income. So yes, ISA not essential in this specific scenario.

DRS1

mebu60 said:

spdavies said:

redpete thanks. Am i right in saying that even though i'm a high band tax payer, i will only get tax on the amount of interest earned, therefore ISA not essential?

You will have a £500 allowance so even at the max £10k saved your interest would be within that if it is your only savings income. So yes, ISA not essential in this specific scenario.

I think that depends what the OP means by "top rate" tax.  If they pay additional rate tax then there is no PSA at all.  An ISA seems like the obvious choice in that case.

Just an additional thought - are the shares actually capable of being sold yet?  Many share schemes have periods of time for which you have to save before you can buy the shares (ag an SAYE Scheme) or keep shares before you can sell them (tax efficiently) (eg a SIP)

spdavies

sorry not additional - earn in the <100k threshold. Shares are available to sell now tax free as i am only looking at the ones that have been invested >5yrs 

DRS1

Tax free?  Just check that - even if there is no income tax there may be some CGT (unless the gain is within the annual allowance)