Best place to save money that is due for tax?

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  • katsu
    katsu Posts: 4,945
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    I would set up multiple regular savers (again there is an article on the site and a great forum thread on them) and use them for the £1-1.5k per month. You can usually save about £250 per month so you would need to find 4-6 suitable accounts.

    Virgin offer 3% currently, for example, First Direct. HSBC and M&S 5%, then there are various others listed so I imagine you should be able to get enough opened.
    Debt at highest: £8k. Debt Free 31/12/2009. Original MFD May 2036, MF Dec 2018.
  • polymaff
    polymaff Posts: 3,903
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    edited 11 April 2019 at 6:52PM
    katsu wrote: »
    Virgin offer 3% currently, for example, First Direct. HSBC and M&S 5%, then there are various others listed so I imagine you should be able to get enough opened.


    Fine - but don't ignore the downside to your 5% suggestions:

    must qualify for/open a bank acount, must switch a bank account, must transfer in n direct debits, must pay significant amounts into the bank account each month, etc, etc.


    They're all tarred with some of the above thorns in the flesh. :)
  • YorkshireBoy
    YorkshireBoy Posts: 31,541
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    polymaff wrote: »
    Fine - but don't ignore the downside to your 5% suggestions:

    must qualify for/open a bank acount, must switch a bank account, must transfer in n direct debits, must pay significant amounts into the bank account each month, etc, etc.


    They're all tarred with some of the above thorns in the flesh. :)
    ...and with many of them you may also forfeit the 5% rate if you close early...which the OP would be doing.
  • polymaff
    polymaff Posts: 3,903
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    ...and with many of them you may also forfeit the 5% rate if you close early...which the OP would be doing.


    That was one of my etcs (e.g. M&S only pay 0.65% if you bail out early) - the other etc. being "feeder account is not by default free" (FD).


    Didn't want to labour my case, you know... :rotfl:
  • chr0s
    chr0s Posts: 8 Forumite
    katsu wrote: »
    I would set up multiple regular savers.

    Aside from logistical considerations that have been mentioned (keeping on top of transfers, minimum deposits, withdrawal dates etc), are there any negatives to setting up multiple accounts?

    I heard in my grapevine that it impacts negatively on credit rating, but my grapevine aren't really clued up on this sort of thing 😂
  • eskbanker
    eskbanker Posts: 30,411
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    chr0s wrote: »
    katsu wrote: »
    I would set up multiple regular savers
    Aside from logistical considerations that have been mentioned (keeping on top of transfers, minimum deposits, withdrawal dates etc), are there any negatives to setting up multiple accounts?

    I heard in my grapevine that it impacts negatively on credit rating, but my grapevine aren't really clued up on this sort of thing 😂
    Savings accounts don't involve credit provision and therefore don't impact on credit ratings as they're not reported to the CRAs.

    On the other hand, current accounts will be reported to the CRAs, who may choose to nudge the invented credit scores down a bit to reflect that you have access to some additional credit, but it's not generally considered to be a significant or long-lasting effect, unless you open about ten new current accounts immediately before looking for a mortgage....

    Are you particularly concerned about your credit history for some reason?
  • chr0s
    chr0s Posts: 8 Forumite
    eskbanker wrote: »
    Are you particularly concerned about your credit history for some reason?
    No but I'm new to all this, as is maybe obvious from some of my questions 😂
  • katsu
    katsu Posts: 4,945
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    The requirements for a current account for the 5% rates is fair - maybe you might not decide to open 3 new current accounts just to get those accounts, however the host of regular savers from Virgin, the building societies etc all listed in the forum thread here, will not impact your credit file as they do not offer credit.

    It is also fair to say you would want/need to look at the terms and conditions to see what interest is paid if you close early. The building societies like Kent Reliance and Nationwide (who I think just closed their regular saver? Take a look) I think often pay out the 3% or whatever they were offering on your withdrawals but it is very good advice to say as you have less than a year until you need the funds that you need to make the right choices.

    For the existing sum you could look at the fixed term savings accounts as some offer 6 and 9 month options so you might find a suitable rate - places like Oaknorth are listed on the options on the main site pages so give that a look.
    Debt at highest: £8k. Debt Free 31/12/2009. Original MFD May 2036, MF Dec 2018.
  • pochisoldi
    pochisoldi Posts: 260
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    eskbanker wrote: »
    Savings accounts don't involve credit provision and therefore don't impact on credit ratings as they're not reported to the CRAs.

    On the other hand, current accounts will be reported to the CRAs, who may choose to nudge the invented credit scores down a bit to reflect that you have access to some additional credit, but it's not generally considered to be a significant or long-lasting effect, unless you open about ten new current accounts immediately before looking for a mortgage...

    An account with no credit facility (overdraft) will have little if any effect on borrowing ability.
    A mortgage lender will ignore it (they are only interested in active borrowing balances, missed payments and defaults).
    A credit card issuer will ignore it (they take a view based on what you earn, and what existing credit is available, what existing credit is being used, are you only making minimum payments on existing credit, and have you any missed payments or defaults).

    The only collateral damage is caused by search footprints on your record. Lots of credit (rather than plain identity) searches make you look desperate for for credit, and everyone knows how lenders only want to lend to those who don't need the credit!
  • Patrol
    Patrol Posts: 134
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    An offset mortgage can be handy for this sort of thing as the money is readily accessible when required. Depending on circumstances (need for a mortgage, current offset deals, tax efficiency, availability of savings accounts) it's worth considering.
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