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  • FIRST POST
    • 6022tivo
    • By 6022tivo 13th Feb 18, 6:06 PM
    • 547Posts
    • 130Thanks
    6022tivo
    NS&I Fixed Rate Renewal
    • #1
    • 13th Feb 18, 6:06 PM
    NS&I Fixed Rate Renewal 13th Feb 18 at 6:06 PM
    Just had my renewal through for my NS&I Fixed Interest and I'm not sure what to do with it.

    To be honest, it's the last fixed term interest one I have.
    Took it out 10 years ago, at the full value.

    My options..
    Another 5YR at 2.15%
    2YR at 1.55%
    Get a new car or a massive party

    I really don't see the point of that interest rate being fixed, I can only really see them going up??
    I am maxed out on current account interest and regular savings, so I don't really know what to do at all!

    Any thoughts?

    I'm lucky in that I am a bit cash rich at the moment, so unsure what to do.

    I pay 25% through salary sacrifice to my pension, I could increase that a bit and live off the cash to bump the wages I suppose..

    Bit boring though!
Page 1
    • kidmugsy
    • By kidmugsy 13th Feb 18, 7:22 PM
    • 10,377 Posts
    • 7,067 Thanks
    kidmugsy
    • #2
    • 13th Feb 18, 7:22 PM
    • #2
    • 13th Feb 18, 7:22 PM
    Sometimes boring is good.

    Does anyone offer a "tracker" savings account, or Cash ISA, at the moment? You may remember them - they'd pay out Bank of England Base Rate plus, say, 1% p.a. They might be a place to hold some cash while you ponder.
    Free the dunston one next time too.
    • Alexland
    • By Alexland 13th Feb 18, 7:55 PM
    • 2,237 Posts
    • 1,631 Thanks
    Alexland
    • #3
    • 13th Feb 18, 7:55 PM
    • #3
    • 13th Feb 18, 7:55 PM
    The pound has been strengthening and that might start feeding into lower car prices in time if you can hold on a bit longer.
    • 6022tivo
    • By 6022tivo 7th Mar 18, 7:52 PM
    • 547 Posts
    • 130 Thanks
    6022tivo
    • #4
    • 7th Mar 18, 7:52 PM
    • #4
    • 7th Mar 18, 7:52 PM
    So, I have a week to make a call.

    My options are 5years at NS&I at 2%
    Nationwide ISA for 1.4% with no withdrawal penalty.

    I'm leaning for the Nationwide, for two reasons.
    I may want to treat myself? Although have other funds.
    Interesting rates will rise a lot over the next 5 years, and the NS&I 2% will turn out to be poor?
    • ValiantSon
    • By ValiantSon 7th Mar 18, 8:32 PM
    • 1,600 Posts
    • 1,344 Thanks
    ValiantSon
    • #5
    • 7th Mar 18, 8:32 PM
    • #5
    • 7th Mar 18, 8:32 PM
    Why are the NS&I fix or the Nationwide ISA your only options? There are better rates elsewhere.
    • 6022tivo
    • By 6022tivo 8th Mar 18, 9:24 AM
    • 547 Posts
    • 130 Thanks
    6022tivo
    • #6
    • 8th Mar 18, 9:24 AM
    • #6
    • 8th Mar 18, 9:24 AM
    Ahh ok, so there are penalty free instant access cash isa's offering more than 1.4%?
    • ValiantSon
    • By ValiantSon 8th Mar 18, 2:14 PM
    • 1,600 Posts
    • 1,344 Thanks
    ValiantSon
    • #7
    • 8th Mar 18, 2:14 PM
    • #7
    • 8th Mar 18, 2:14 PM
    No, but the Nationwide ISA isn't really an easy access account either. It is a fixed rate ISA that allows one withdrawal. I was saying that you good get a better rate with a notice account or a one year savings bond, which are broadly comparable products without the ISA wrapper.

    ISAs are only advantageous if you would pay income tax on the interest earned elsewhere, and even then, only if the interest rate offered by the ISA is sufficiently high enough, as even with paying income tax on interest you can still be better off.

    How much are you intending to save? What income tax rate do you pay? How much access will you need to the money over the course of one year. These are the questions that will allow us to offer suggestions.
    • 6022tivo
    • By 6022tivo 8th Mar 18, 2:18 PM
    • 547 Posts
    • 130 Thanks
    6022tivo
    • #8
    • 8th Mar 18, 2:18 PM
    • #8
    • 8th Mar 18, 2:18 PM
    It's around 20k, but will have another 20k to add to it in July.
    I already have interest from other accounts close to the 1k interest limit.
    Tax at 20% but don't want to do a self assessment.
    Don't think I will need access, but if I did it would be a one off.
    • ValiantSon
    • By ValiantSon 8th Mar 18, 2:59 PM
    • 1,600 Posts
    • 1,344 Thanks
    ValiantSon
    • #9
    • 8th Mar 18, 2:59 PM
    • #9
    • 8th Mar 18, 2:59 PM
    You don't need to do self assessment if you are paid through PAYE. HMRC will adjust your tax code to collect any tax that is owed.

    If you are happy to lock it away for a year then you can get 1.9% from Investec. Alternatively, Secure Trust Bank will pay 1.66% on a 180 day notice account.
    • 6022tivo
    • By 6022tivo 8th Mar 18, 3:07 PM
    • 547 Posts
    • 130 Thanks
    6022tivo
    1.9 is good, but attracts tax bringing it down to about 1.5% which is 0.1 above the nationwide which would be a lot easy for me to setup and manage. Interesting though.
    • ValiantSon
    • By ValiantSon 8th Mar 18, 7:01 PM
    • 1,600 Posts
    • 1,344 Thanks
    ValiantSon
    1.9 is good, but attracts tax bringing it down to about 1.5% which is 0.1 above the nationwide which would be a lot easy for me to setup and manage. Interesting though.
    Originally posted by 6022tivo
    On a 20,000 sum, that 0.12% extra is equal to 24. Not a vast amount of money, but surely not to be sniffed at either?

    Setting up the new account with Investec shouldn't be any more complex than setting up the ISA with Nationwide. There is no management required at all. You open the account, deposit the money and a year later take it back out with the interest.

    Details and link to Investec here: https://www.moneysavingexpert.com/savings/savings-accounts-best-interest#fixedsavings
    • Dazed and confused
    • By Dazed and confused 8th Mar 18, 7:48 PM
    • 2,479 Posts
    • 1,185 Thanks
    Dazed and confused
    I pay 25% through salary sacrifice to my pension, I could increase that a bit and live off the cash to bump the wages I suppose..

    Just how low have you taken your taxable pay (P60 figure) down to? It probably doesn't apply to you but if it's low enough you could potentially benefit from the starter savings rate of tax rather than the Personal Savings Allowance (which I presume is hat you mean by the reference to "1k interest limit).

    Personal Savings Allowance means upto 1,000 is taxed at 0%.

    Starter savings rate is a similar 0% tax band but applies to a maximum of 5,000 interest. But the exact amount you can have taxed at 0% depends on what your taxable salary, company benefits etc total.

    If you are able to use the 5,000 band then you will get the Personal Savings Allowance rate in addition so potentially 6,000 savings interest all taxed at 0%.
    • 6022tivo
    • By 6022tivo 8th Mar 18, 8:10 PM
    • 547 Posts
    • 130 Thanks
    6022tivo
    I am seriously considering increasing my salary sacrifice from 25% to 90%
    How low would I have to take it to get this rate.

    EDIT
    It means that most people with a total income of less than 15,600 will not pay any tax on their savings. If someone!!!8217;s total income (such as wages, pension, benefits and savings income) is less than their personal allowance, plus 5,000, they will be able to register for tax-free savings with their bank or building society.

    The income includes pension though?

    Salery sacrifice doesn't count, but my other benefits do, health etc..

    I've looked at the case studies, so if I try and get paid (inc benefits) around 11500, I won't pay any tax (just NI) then I'm allowed savings tax free of around 5k to around 15800

    Very interesting.
    Last edited by 6022tivo; 08-03-2018 at 8:17 PM.
    • Dazed and confused
    • By Dazed and confused 8th Mar 18, 8:15 PM
    • 2,479 Posts
    • 1,185 Thanks
    Dazed and confused
    The starter savings rate applies to upto 5,000 of taxable interest and is applied after your Personal Allowance.

    However this rate band is reduced pound for pound for each pound you earn from taxable wages, company benefits, pension income, rents etc (basically everything taxable except savings interest and dividends) over and above the Personal Allowance.

    For example if your wages etc were 11,500 you can benefit from the full 5,000 savings rate band.

    But if your wages etc were 16,000 you only get 500 of the starter savings rate band.
    NB. The Personal Savings Allowance is available on top of the starter savings rate band.

    As soon as you hit 16,500 in wages etc you have lost this rate band and will have to rely solely on the Personal Savings Allowance rate band of upto 1,000 taxed at 0%.
    Last edited by Dazed and confused; 08-03-2018 at 8:17 PM.
    • 6022tivo
    • By 6022tivo 8th Mar 18, 8:22 PM
    • 547 Posts
    • 130 Thanks
    6022tivo
    So, say for theoretical reasons I get paid 40000, I can tell my company I want to lose 75% of my salary for salary sacrifice.

    I would get paid 10000 a year (minus some NI) and then I would get 5000 tax free interest?
    My pension would be boosted by 30000 a year (My company pass their NI savings to me as well, further bonus) + the company 10% (Maybe 5%).

    Keeping it simple here?
    • Dazed and confused
    • By Dazed and confused 8th Mar 18, 8:32 PM
    • 2,479 Posts
    • 1,185 Thanks
    Dazed and confused
    I wouldn't consider it tax free (that's ISA's) but it would be taxed at 0%.

    I know it probably seems the same but ifyou were caught by the High Income Child Benefit Charge you would soon understand the difference!

    I thought salary sacrifice had changed to limit the benefits but maybe pension contributions are still ok?

    If your earned income was 10,000 you could actually have (current tax year) up to 7,500 savings interest and pay no tax on it

    1,500 - covered by spare Personal Allowance
    5,000 taxed at 0% (starter savings rate)
    1,000 taxed at 0% (Personal Savings Allowance rate)

    It isn't just wages that count though it's all taxable income except savings interest and dividends so if you have a company benefit such as a car or Medical insurance you need to add that onto your taxable wages. Likewise anything like rental income.
    Last edited by Dazed and confused; 08-03-2018 at 8:35 PM.
    • 6022tivo
    • By 6022tivo 8th Mar 18, 8:45 PM
    • 547 Posts
    • 130 Thanks
    6022tivo
    My current income is Wages
    Savings Interest
    Premium Bonds and various Tax free NS&I products
    I'm in a company share scheme which ends this summer in which I pay in after tax, and I get and will receive the shares at the bargain price when the scheme opened, I will exercise these and sell on the day I receive them. My understanding that my initial contribution and up 11,xxx (Capital gains limit) is safe from any tax, and is not classed as an income? Not sure about this though.
    Nothing from anything else. No BTL or anything, thank god.
    • Dazed and confused
    • By Dazed and confused 9th Mar 18, 10:55 AM
    • 2,479 Posts
    • 1,185 Thanks
    Dazed and confused
    You can ignore Premium Bonds and the NS&I products of they are genuinely "tax free" in the same way an ISA is tax free.

    If the share scheme is going to result in a capital gain then that won't affect your income tax rate (although your income tax rate can affect the capital gains tax rate if you make enough profit to go over your capital gains allowance/exemption).

    It would probably be wise to check the share scheme out with your employer just to be 100% certain there is no income tax element.
    • 6022tivo
    • By 6022tivo 9th Mar 18, 11:19 AM
    • 547 Posts
    • 130 Thanks
    6022tivo
    Yeah no tax implications.

    My only unlikely concern would be if the profit on the day of purchase and sale was over the CGT limit. If so I would only sell the volume to keep under that limit.
    The remaining I would leave until the following tax year, any dividends in that time count as income I guess.
    • Dazed and confused
    • By Dazed and confused 9th Mar 18, 11:48 AM
    • 2,479 Posts
    • 1,185 Thanks
    Dazed and confused
    Yes the dividends would be income but they aren't counted as earned income and come last in calculating your tax, after the savings interest.

    There is also a 0% tax rate for the first 2,000 of dividend income (in 2018:19).
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