pensioner tax free savings

clitb

My mother has quite a lot of savings that she dosn't touch. She has some in national savings pensioners bonds for a monthly income, Where would the best place to put the rest of her money for maximum tax free Returns.

martinman3

Does she use all of her personal allowance ?
If she has an additional pension, depending on its size, there may be some income which would not be taxed.

Does she have a cash ISA for the 2007/2008 tax year ?
Do you know what rate of interest the savings not in Guaranteed Income Bonds is receiving ? If it is in old NS&I fixed interest certificates etc they may be giving low returns, you need to check them.

Ideas: (assuming that internet accounts are excluded )

If you don't have an ISA for 2007/2008
You can get 5.95% tax free paid monthly (or 6.15% annually) in a 2 year fixed rate ISA at Nationwide Building Society (£1 minimum).
or 6.20% tax free paid annually in a 3 year fixed rate ISA at Northern Rock (£500 minimum)
or 6.10% tax free paid annually in a 3 year fixed rate ISA at Leeds Building Society (£1 minimum)
or RPI + 2.50% tax free paid annually in a 2 year Inflation Buster ISA at Leeds Building Society (£1000 minimum)

The maximum contribution for this tax year would be £3000 for all above, rises to £3600 for 2008/2009 tax year.

If you do have an ISA for 2007/2008 and/or have £3600 for an ISA for 2008/2009
RPI + 1.35 tax free in NS&I Index Linked Saving Certificates (£100 minimum, interest added to certificates, see other threads on subject).

Note that all of the fixed rate ISAs above will outperform the current issue Guaranteed Income Bonds for their term, it would be interesting to know what rate your mother is receiving on hers.

What you decide depends on the sums involved, requirement to access money before term ends and your mother's existing accounts and their access conditions.