Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • chr0s
    • By chr0s 10th Apr 19, 6:18 PM
    • 8Posts
    • 0Thanks
    chr0s
    Best place to save money that is due for tax?
    • #1
    • 10th Apr 19, 6:18 PM
    Best place to save money that is due for tax? 10th Apr 19 at 6:18 PM
    Hi 👋

    I am self-employed, and I have a fat lump sum sitting in my bank account that is due to be paid to HMRC next January.

    What is the best thing to do with this money in the meantime? I would like to earn as much interest on it as possible, with the following caveats:
    • There can be ZERO risk of the money losing value
    • I must be able to make multiple deposits between now and next January
    • I must be able to withdraw the money in January (i.e. no 12-month minimum arrangements)

    I used the bank account savings calculator (I won't link because I'm a new account and I don't want to get flagged for spam, but you can Google it if you're not familiar). It advised me to set up 3 accounts and, through various transfers, achieve 4.5% interest.

    Any other suggestions are greatly appreciated!
Page 2
    • Patrol
    • By Patrol 13th Apr 19, 1:29 PM
    • 83 Posts
    • 71 Thanks
    Patrol
    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.
    • 20SmthngSver
    • By 20SmthngSver 13th Apr 19, 3:33 PM
    • 47 Posts
    • 19 Thanks
    20SmthngSver
    Some of the easy access accounts have an introductory rate for 12 months then drops. But 2018/19 tax is due January 2020.

    There are quite a lot of 3, 6 and 9 month accounts now, mostly Sharia compliant, and they offer higher rates.
    .....
    2019 1st Quarter Home Deposit Savings saved: 35,000
    Pension saved: 9800
    ..
    • chr0s
    • By chr0s 15th Apr 19, 7:49 PM
    • 8 Posts
    • 0 Thanks
    chr0s
    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.
    Originally posted by Patrol
    No plans or aspirations to own a house just yet, but thanks for the suggestion.
    There are quite a lot of 3, 6 and 9 month accounts now, mostly Sharia compliant, and they offer higher rates.
    Originally posted by 20SmthngSver
    What are the implications of Sharia compliance?
    • colsten
    • By colsten 15th Apr 19, 8:02 PM
    • 10,173 Posts
    • 9,337 Thanks
    colsten

    What are the implications of Sharia compliance?
    Originally posted by chr0s
    Google is your friend. E.g. https://www.moneyadviceservice.org.uk/en/articles/sharia-compliant-savings
    • bowlhead99
    • By bowlhead99 15th Apr 19, 8:33 PM
    • 8,615 Posts
    • 15,758 Thanks
    bowlhead99
    No plans or aspirations to own a house just yet, but thanks for the suggestion.

    What are the implications of Sharia compliance?
    Originally posted by chr0s
    Without worrying about whether I get it exactly right or offend any sensitivities, essentially if you love your old Biblical texts you might feel that making profit from money lending is a sin and lending should have no interest rate. Old religious laws from Judaism and Islam deem usury to be a bad thing; and a principle of Islamic finance is that money is simply a medium of exchange and you shouldn't be allowed to get a profit benefit simply by lending to or receiving money from someone.

    However, for hundreds of years people have thought that religion is all very well but not when it gets in the way of capitalism. So to get around the basic tenets, there are a whole host of fiddles and loopholes, which allow you to get away with modern western financial practices while dressing them up as something else to get off on a technicality. I am being flippant but these days there is a lot of money to be made from selling Islamic financial products from mortgages, bank deposits and investment funds to an audience who want to be able to follow their strict laws but also want to participate in a convenient financial transaction which carries a suitable interest rate without calling it interest.

    For example you can't lend someone 100 and say they must give you back 103 in a year, but it's fine to take an investment participation in their business venture which has a high probability of making a profit of 3 to be returned with your capital in a year's time, which isn't "interest", honest guv.

    Without boring you with the minutiae, effectively a Sharia-law-compliant deposit in an islamic finance institution will allow you to participate as an investor in certain business which is expected to deliver a certain 'profit' over the period in which the bank has your money, and the accretion of that profit from the entirely legitimate business venture would not take the nature of interest, as long as they choose not to call it interest and instead call it something else like 'expected profit rate' (you expect it will be x% AER, but it's not guaranteed, because paying or receiving an agreed rate of interest for holding someone's money or assets is a bad thing).

    You would not expect a well established Islamic bank to deliberately renege on their 'expected profit rate' because they would lose credibility. So, you can generally take the advertised rates as being just like interest rates, but strictly the proposed return for the arrangement in which you participate is some sort of honest and ethical 'profit' from the venture, which is definitely not 'riba' (exploitative and unjust interest-like gains from simply making someone hold your money).
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,006Posts Today

7,634Users online

Martin's Twitter
  • Have a great Easter, or a chag sameach to those like me attending Passover seder tomorrow. I?m taking all of next? https://t.co/qrAFTIpqWl

  • RT @rowlyc1980: A whopping 18 days off work for only 9 days leave! I?ll have a bit of that please......thanks @MartinSLewis for your crafty?

  • RT @dinokyp: That feeling when you realise that you have 18 days of work and only used 9 days of your annual leave! Thanks @MartinSLewis h?

  • Follow Martin