Best savings account?

Who would keep that sort of money in a current account... Not only is there the FSCS none guarantee over £85k, but the tax man will be your best friend.

If interest rates are at 4% this means as a basic and higher tax payer you should only have around £24k and £12k in none tax wrapper accounts. Any more you are likely to earn more than £1000 and £500 in interest which will be taxed on.
 
reilly said:
Who would keep that sort of money in a current account... Not only is there the FSCS none guarantee over £85k, but the tax man will be your best friend.

If interest rates are at 4% this means as a basic and higher tax payer you should only have around £24k and £12k in none tax wrapper accounts. Any more you are likely to earn more than £1000 and £500 in interest which will be taxed on.
Click to expand...

Where does the 12k and £500 figures come from? Is there a table available showing the bands?
 
Dirk Diggler said:
Where does the 12k and £500 figures come from? Is there a table available showing the bands?
Click to expand...
If you're a higher rate tax payer you interest tax allowance is reduced to £500.

More detail here:
www.gov.uk

Tax on savings interest

You do not pay tax on your savings interest if you're on a low income.
www.gov.uk www.gov.uk

Essentially, if you're a higher rate tax payer, at 4% interest, you'll exceed the £500 allowance about £12k of cash.
 
Jokester said:
If you're a higher rate tax payer you interest tax allowance is reduced to £500.

More detail here:
www.gov.uk

Tax on savings interest

You do not pay tax on your savings interest if you're on a low income.
www.gov.uk www.gov.uk

Essentially, if you're a higher rate tax payer, at 4% interest, you'll exceed the £500 allowance about £12k of cash.
Click to expand...

didn't someone say the guy is a lottery winner? Therefore he won't be taxed on that. His earnings could keep him in the basic rate tax bracket. Would still be getting taxed on 100k at 4% though, as it's over the personal savings allowance for a BR tax payer.
 
englishpremier said:
didn't someone say the guy is a lottery winner? Therefore he won't be taxed on that. His earnings could keep him in the basic rate tax bracket. Would still be getting taxed on 100k at 4% though, as it's over the personal savings allowance for a BR tax payer.
Click to expand...
Might be wrong but I thought it's just the winnings are tax free, as in no CGT... You'll still pay tax on interest if applicable?
 
Jokester said:
If you're a higher rate tax payer you interest tax allowance is reduced to £500.

More detail here:
www.gov.uk

Tax on savings interest

You do not pay tax on your savings interest if you're on a low income.
www.gov.uk www.gov.uk

Essentially, if you're a higher rate tax payer, at 4% interest, you'll exceed the £500 allowance about £12k of cash.
Click to expand...

So it's probably better loading up the ISA allowance, even if it's a slightly lower rate. I assume the tax on anything over the threshold is classed as income, therefore >40% of the interest will be deducted in tax?

I've not had to think much about this as interest rates have been so low in recent years, but it's definitely a factor now - I'll need to get the ISA transferred because the current rate with BOS is a joke.
 
Why would it be total cringe?

Yep my winnings are tax free and I'm in the basic tax bracket for earnings. Obviously I'd have to pay tax on savings interest if over £1000 per year if not in ISAs.
 
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