Savings accounts for RTM sinking fund

LordStreet

I am a director of a Right To Manage leasehold company for a block of 20 residential flats running for well over 10 years now. Over those years we have built up our sinking fund and now want to invest some of that money...any advice where and how we can invest it? It seems it has to be invested in a linked trust account.

poseidon1

The general run of high street banks will not be interested in providing interest bearing accounts.

Metro Bank by contrast have been actively marketing trustees accounts, however their interest rates on deposit are not the best.

Alternatively Investec private bank's business services unit might be worth approaching if funds are of sufficient magnitude -

https://www.investec.com/en_gb/business/popular-solutions/treasury-and-risk-management/cash-management.html#:~:text=Business%20Cash%20management,your%20accounts%20quick%20and%20simple.

However as well to note if the funds to be be invested are large enough to pay interest in excess of £500 per annum, then this will trigger HMRC trust tax compliance. Annual tax return forms SA900 will be required and tax payable at the prevailing basic rate ( currently 20% but rising to 22% from 2027/28). See article below -

https://barnesroffe.com/insights/april-2024-changes-to-rules-for-interest-earnt-on-service-charge-funds-held-in-a-trust/#:~:text=From%206%20April%202024%2C%20the,and%202024/2025%20tax%20years.

Clearly therefore, the return on funds 'invested' after tax must be at a worthwhile level to justify the additional administrative burden.