savings for a non tax payer

Pooky23

I work part time and do not earn enough per annum to pay tax. My DH pays 40% tax on his earnings.

He has an ISA with Barclays which he opened last year (Tax Beater Cash ISA) which has now dropped it's interest rate to 5.31% I think. The rest of our savings are in my Icesave Easy Access savings account. I do not have an ISA.

My question is, as I do not have to pay tax, would some of my savings be better off in one of the Icesave fixed interest rate accounts? One pays 6.76%. We could tie most of what we have up for 1 year or possibly longer, leaving some in the Easy Access account for emergencies. We can continue to save monthly into the Easy Access account to keep that topped up.

We didn't think it was worth putting any more into my husbands ISA as the rate has dropped and not worth the hassle of opening another one if we can get a higher rate putting everything else in my name.

What do you think?

Baldur

As far as the ISA is concerned, at your DH tax level, it's worth looking at transferring the Tax Beater to a better account, e.g. currently, Nationwide are offering 6.15% fixed for 1 or 2 years & will accept transfers, as will Halifax for their 1/2/3/4-year fixed rate ISAs, at rates up to 6.2% for the 4-year fix - you just have to complete their transfer form in either case.

liitleblackcat

This is exactly the situation my wife and I are in. I pay 40% tax and she has no income. Currently we put the full amount into a cash ISA every year (one in my name and one in hers) and everything else goes into savings accounts in her name (currently mainly into Kaupthing Edge at 6.5%). I also keep track of the interest she receives to make sure it doesn't exceed the personal allowance. The only reason for putting anything into an ISA in my name is that if my wife were to peg it, I would potentially be left with a huge tax bill.

debbie42

Pooky23 wrote: »

We didn't think it was worth putting any more into my husbands ISA as the rate has dropped and not worth the hassle of opening another one if we can get a higher rate putting everything else in my name.

It depends how much you have to save, and what term you are looking towards? I have ISAs even though I am below the tax threshold, as I may well earn again sometime in the future. There are some decent rates around for ISAs, which make the choice easier.