I've never had any savings before and need help

CurlySue2017

I posted on the forum at the back end of 2024 - I can't figure out how to link to that thread sorry!

But in short, I received a sum of money as a gift (£30k) and the plan was to use this as a deposit for a house purchase, so I was looking for somewhere to put it to maximise any interest for a short period of time. Those plans have now changed and a house purchase is off the table for the moment so here I am again.

As per the title, I have never had any savings at all so for me this is a big amount of money and to be honest, it scares me! As it stands it is in a easy access savings account - which is what the forum suggested would be best in the short term (interest is currently 3.65%) I also said originally that I wouldn't be able to add to the pot but this has now changed and I have been transferring money in monthly, so the amount is now closer to £35k.

But never being in this position before, I'm a little clueless as to what to do with it now 😕

I'm also worried about paying tax on any interest that I earn and would rather avoid that if I can.

Given that I don't need immediate access to this money anymore and can add a monthly contribution to the pot, could I have some advice please on whether to simply leave it where it is or move it elsewhere? An ISA maybe? Or smaller amounts in different places?

la531983

You really need to move £20k into an ISA before doing absolutely anything else.

Altior

This 4.3% (variable) EA cash ISA is probably not a bad starting point, for £20K. Assuming you have not paid in (subscribed) to any ISAs already in the current tax year.

Cash ISA | Compare Our Latest Cash ISA Rates | HL

la531983

To add to the above, you can then put the rest in the same ISA in about 5 weeks time.

CurlySue2017

Thank you! I did think an ISA was probably the best way to go but in all honesty, I really don't understand them at all. Do I simply just transfer £20k from the account that it is in now, into my choice of ISA and that's that?

Also could anyone tell me, will I be liable for tax on this already because it has been sat in a standard savings account since the end of 2024?

la531983

https://forums.moneysavingexpert.com/discussion/comment/81907653#Comment_81907653

3.85% of £30k is £1,155. Given you have a balance of £35k now, the interest earned in 25/26 is going to be more than £1,155. It will likely be more than £1000 even if you move £20k out into an ISA today.

You will likely have to pay tax on all interest earned above £1000, but nobody on here knows your tax situation so do not treat this information as gospel.

Angelica123

https://forums.moneysavingexpert.com/discussion/comment/81907659#Comment_81907659

They posted in Nov originally about having 30k so it looks like they've only had the huge sum in savings for a few months so potentially their interest would be a lot less.

Anyway, to OP - yes transfer 20k to a cash ISA now (presuming you have not put any money in an ISA in this month) and then the other 15k in the same ISA in April in the new tax year.

la531983

https://forums.moneysavingexpert.com/discussion/comment/81907704#Comment_81907704

No they said above its been sat there since Nov 2024. So its going to be over £1k interest this tax year (25/26) on the face of it.

Angelica123

https://forums.moneysavingexpert.com/discussion/comment/81907720#Comment_81907720

You're right! I thought it was Nov 25!

CurlySue2017

Thank you again

Sorry to be so clueless on these things but can I just ask this question again please -

Do I simply just transfer £20k from the account that it is in now, into my choice of ISA and that's that?

Is it just like any other bank account in that respect?

friolento

https://forums.moneysavingexpert.com/discussion/comment/81907735#Comment_81907735

it’s essentially just another account and limits on annual deposits, albeit with special tax treatment if you comply with the T&Cs

Have you read the MSE ISA Guide, and are you aware of the tax free savings MSE Forum?