Savings account that won't pay interest until 2009/10 tax year?

merlinthehappypig

Does anyone know of an instant access savings account (with a decent rate) that, if we open it after April 6th this year, won't pay the interest until the anniversary of the opening ie. in the 2009/10 tax year?

I know Sainsbury's Internet Saver pays interest on the anniversary, but we already have one of those. Everyone else I can see pays out during the 2008/09 tax year even if opened after April 6th.

caliston

Some offshore savings accounts will do this (offshore here means Isle of Man, Guernsey, Jersey). You can choose not to take interest for several years - handy if you're retiring and your income will drop. There are usually plenty of good-paying accounts offshore - Moneyfacts will give you a table.

Look for an account that will do transfers in and out by BACS - sometimes offshore you can be hit by transaction fees.

The tax situation is a bit more complex - you can either have interest paid gross and the bank will declare the amount to the Inland Revenue (you'll probably need to fill in a tax return and pay tax on it yourself) or you can have tax deducted at source (currently 20%, will rise in future years). Google 'European Savings Tax Directive' for the details.

Be aware that the compensation schemes are a lot less strong: IoM has 75% of the first £20K protected, while Jersey and Guernsey have nothing (apart from Northern Rock, whose offshore funds are currently backed by the UK government).

merlinthehappypig

Thanks, whilst that seems o.k. in principle I was wanting to put about £200000 away so the compensation scheme is an issue.

I wasn't aware NR did offshore accounts so will look into that. We simply want to delay the interest until the following tax year as we are almost at the 2008/09 limit already.

We managed to keep the interest just under the personal allowance level this year by putting a chunk into Sainsburys which doesn't pay out until July this year, but appreciate that there is going to be a limit on how much longer we can do this for!