How To Avoid Paying Tax On Your Savings Interest
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- Опубліковано 21 лис 2024
- Recent data from HM Revenue and Customs (HMRC) shows that people are probably not doing enough to avoid paying tax on their savings interest.
For the 2023/24 tax year the amount of Income Tax collected from UK savers was around £6.6billion. This is nearly double the amount collected in 2022/23.
What’s more, HMRC predict that the amount collected for the 2024/25 tax year will be around £10.4billion.
This is tax you may be paying on the interest you earn on your cash savings.
You do not need to leave your cash savings exposed in this way as there are plenty of valid, legal ways to avoid paying tax on your savings interest.
Let’s just remind ourselves how tax works on savings interest.
When your bank pays you interest on the cash you hold with them, that interest payment is potentially subject to Income Tax.
Before 6th April 2016, banks paid interest with an automatic deduction for basic rate Income Tax. So, you would have received your interest net of basic rate tax.
Since 6th April 2016, banks have paid interest gross. So, there is no automatic deduction for any Income Tax, you receive the full amount of interest.
At the same point in time a new Personal Savings Allowance was bought in.
It allows you to earn up to £1,000 of interest tax free if you are a basic rate Income Tax payer and £500 tax free if you are a higher rate Income Tax payer.
There is no Personal Savings Allowance if you are an additional rate Income Tax payer.
Banks now report all of your interest payments to HMRC, so they know what interest you have been paid.
There is also further relief for savers who have little or no income by way of the starting rate for savers.
If your income from other sources like employment or pensions is below £17,570 then you could potentially earn up to £5,000 in savings interest tax free.
The £5,000 starting rate reduces by £1 for every £1 you earn over the Personal Allowance of £12,570.
So, for example, someone who earns income from a job of £14,000 could receive a further £3,570 in savings interest without paying tax on this interest.
Plus, they would still have their Personal Savings Allowance as well.
The reason why recent HMRC tax receipts from savings interest is increasing and expected to increase further is two-fold.
HMRC have said: “Income from savings is significantly more in 2024 to 2025 (approximately six times greater than 2021 to 2022), largely due to the actual and forecasted changes in bank and building society interest rates following the large reductions in bank and building society interest rates up to the end of 2021”.
As we all know interest rates on savings were low for a long time, so now they have increased, it’s only natural that tax revenue will increase.
However, there is a second factor as well and this is the frozen Personal Allowance. This is the amount of money you can earn before paying any Income Tax.
From the period 2014/15 to 2021/22 the Personal Allowance increased from £10,500 to £12,570. An average yearly increase of 3.06%.
Since 2021/22 the Personal Allowance has remained frozen at £12,570 and is currently scheduled to remain that way until 2026.
Had we continued the average increases since 2014/15 the Personal Allowance should now be £13,758 and £14,179 by the time we get to 2026.
Earnings from work and State Pension will generally increase each year to help cover the rising cost of living.
So, this type of income is taking up more and more of the Personal Allowance and beyond leaving no room for income earned from savings interest.
This in turn pushes everything up the tax bands. So, if you’re a basic rate taxpayer and paid more, you might find yourself falling into the higher rate tax bracket and some higher rate taxpayers might fall into the additional rate bracket.
Earnings are taxed first, so savings interest is added on top of earnings. The last thing you want is your savings interest falling into a higher tax band meaning you lose 40% or even 45% of the interest.
That 5% interest rate doesn’t look as good if you only end up receiving 2.75% after tax.
Thankfully, there are plenty of ways to avoid tax on savings interest.
Now because interest rates have gone up and the Personal Allowance has been frozen it doesn’t take holding a lot in cash to start paying tax.
So here are six ways to avoid paying tax on savings interest.
#1 - Check how much you actually need to hold in cash
#2 - Use your ISA allowance
#3 - Use Premium Bonds
#4 - Use Pensions
#5 - Use UK government Gilts
#6 - Use your partner’s allowances
Don’t pay more tax if you don’t need to.
#taxonsavings #savingstax #avoidtaxes
Apologies for the confusion around the Gilt shown in the HL section. This isn't actually a Gilt but a Strip instead and is subject to tax however the principle applied in the calculations are still appropriate to Gilts that you buy at a discount. No CGT applies.
Thanks for the clarification. Presumably there is no point in using a GIA for this strategy as the gilt interest would be taxable even if the profit at redemption isn’t subject to income tax or CGT?
Are you sure it can be bought at the price shown in the video? HL state it can only be sold and the LSE quote at 95 not 92.8
If you voted for Labour, you are part of the problem
I checked the HL web site, ostensibly the price is £92.80 but the green dealing button is off. Can you buy it.
Called HL and they do not trade Strips any more. Shame
Tax laws can be so complex, and it’s super helpful to break them down like this. Understanding how different policies can impact our finances is crucial for making informed decisions.
Making profitable investments during this time of political change can be risky without that insight. For me, working with an adviser is the best first step to navigate these complexities and make informed choices.
I think having an investment advisor is the way to go. I've been with one because I lack the expertise for the market. I made over $490K during the recent dip, highlighting that there's more to the market than we average folks know
Hmmm this is quite interesting, Please can you leave the info of your investment advisor here? I’m in dire need for one
Melissa Terri Swayne can't divulge much. Most likely, the internet should have her basic info, you can research if you like.
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get.
In the 1990s I sold pensions on the strenght that the tax free lump sum would pay off most if not all of the mortgage and leave the investor with a pension for life. Most were over a 40 year term plus, I was not alone.
The approach of selling pensions with the promise that a tax-free lump sum would pay off mortgages and provide a lifelong pension was common in the 1990s. However, many factors can affect the outcome, including changes in the housing market and interest rates. It's crucial for investors to seek personalized advice and consider diversified financial strategies to ensure long-term financial stability.
it's vital for investors to seek personalized advice and adopt diversified financial strategies. Working with a knowledgeable financial adviser is crucial for achieving long-term financial stability and freedom
I've experimented with a few over the past years, but I've stuck with ‘’Nicole Anastasia Plumlee” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look her up.
thats the endowment mortgage right? We had an adviser recommend that and he used the maximum possible stock market return to calculate projected returns - which proved to be bad advice when 2008 came along and most funds failed to pay the principal!
Yes my advisor’s recommendation for an endowment mortgage didn’t work out well for me either. From the forecast of my mortgage paid off plus a nice cash sum also, the reality was neither, with me having to make up the shortfall of thousands of pounds.
I Hit 110k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started last month. Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject. thanks to Wendy Hubbard Stewart for helping me achieve this
I was skeptical at first till I decided to try. Its huge returns is awesome. I can't say much.
she's mostly on Instagrams, using the user name
@Fxwendy12 ..that's it .
Please tell her that I reffed you 👍
She’ll guide you💯
@Georgefaller341-Regarding your comment - "Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject." - Even my fairly unaware parents (now buried long ago) commented on how financial information was deliberately with held from the working class, mainly by the middle & "upper" class. - This is no random circumstance but quite deliberate suppression of the lower orders. - Yes, they were the ones who built civilisation & maintain it, only for the upper classes to show their gratitude by abusing us ! ! !
I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
Regardless of how you see it the Taxman is a thief. Your annual income is after tax, yet you pay tax again when you save it. Isn't it double taxation?
Retirement is now more difficult than it was in the past. I've been saving for a long time instead of investing, and right now I only have about $400K. considering all the inflation, i'm thinking of investing in stocks, i dont just have idea on market strategies.
The increasing prices have impacted my plan to retire at 62, work part-time, and save for the future. I'm concerned about whether those who navigated the 2008 financial crisis had an easier time than I am currently experiencing. The combination of stock market volatility and a decrease in income is causing anxiety about whether I'll have sufficient funds for retirement.
This is precisely why I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $800k
Mind if I ask you to recommend this particular coach you using their service?
My CFA ’Stacy Lynn Staples ’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. Thanks for sharing.
It’s a rip off interest rates that don’t keep up with inflation and your money still devalues every year and then they tax you on the interest. Thanks for those tips
gold increased 30 % in the last year. savings accounts gave 5%. Make your choice.
Thank you. I am hopeless when it comes to monetary issues - I don’t grasp figures easily- and so will have to watch again. Thanks for being here
These frequent tax code changes are disrupting my long-term investment strategies. Are there ways to structure my investments to be more resilient to potential tax code modifications?
This is why the US should elect more progressive politicians, who know how to manage budgets and give us (yes, pur country's initials literally spell out that pronoun) much better tax credits in return for better public education and better public healthcare. but since these are nonexistent, my husband and I are being guided to finance our retirement and healthcare through a diversified investment portfolio
@@hasede-lg9hj How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
Annette Marie Holt is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
I greatly appreciate it. I'm fortunate to have come upon your message because investing greatly fascinates me. I'll look her up and send her a message. You've truly motivated me. Thanks.
Thanks but a video for retired people with savings would be good 👍
Agree, as I'm retiring in 2025.
Excellent explanation of how to minimise tax on savings . Mention of short dated government bonds was particularly useful - I didn’t know about that.
0:20 0:20
This is the most usefull discussion for UK pensioners, and would be pensioners.
Thanks for this, I just got a letter from HMRC regarding tax on the interest earned, the effective interest rate is less impressive after the tax taken. So I need to take some action.
Ive been declaring my tax on my savings. Nearly £800 this year...i pay tax on everything. Looking forward to sitting down and watching this episode 🙂
Excellent.. more please. Very clear and concise
Very well explained and covers all the sensible options. I think you should have pointed out that if you transfer to stocks/shares instead of cash, you could pay tax on dividends and/or capital gains tax when you sell, especially as the limits for both have reduced.
Thank you for the video and information about paying the correct amount of tax.
There is no _avoiding_ paying tax, but advisors show people how to pay the correct amount.
There are ways to pay the *_correct amount of income tax_* , not _avoid paying income tax_ .
I seem to remember that tax avoidance is legal but that tax evasion is illegal.
Edit: Having checked, I see that tax avoidance will get more and more difficult, and less and less ethical, the wealthier you become. But it's easy, and equates to only paying what you're supposed to, if you don't mind staying just comfortable.
@@user-yq2wk6yg8s Quite right. Nevertheless, in my view, you do not avoid paying tax when you pay the whole amount of what is due for your circumstances.
I think if more people learnt about finances, including myself, fewer people would complain about rich people paying the minimal taxes they owe because they too would be taking the same actions.
@@longrolstral Trouble is, the rules are always changing. That's one reason why people are prepared to pay financial advisers. But the wealthy can afford to pay the best qualified and track record-proven advisers. Those advisers probably are insured against getting it wrong. Ordinary FA on the high street; I doubt it. Mind you, at least politicians can get hammered for cheating.
When the interest rates were very low for years like you said, I put in a fixed saving account for 5 years.
And receiving the interest of about £2500 over 5 years, thinking it is only £500 per year for each year of the Personal Saving Allowance of £1k per annum.
Wrong!
I was allowed £1k tax free and the rest was taxed by HMRC. Nobody told us that we should withdraw interest every
year to avoid income tax until too late.
This can still happen to people fixing their Saving years and withdrawing interest in the end thinking of compound interests will be tax free. No, Very annoying!
Carl please tell people that esp. with bigger fixed saving earning bigger than £1k interest per year for Basic Tax payers.
It still hurts.
interest is taxed in the year it's received so I guess that your interest was paid in one go at end of the 5 years, so in that year you received all 2,500. But some products do pay the interest annually or monthly.
This was extremely useful as i am having to retire soon on medical advice and
want to avoid greedy taxman making me pay tax twice.
Dan the tax man is not greedy .It is the job of the officials to establish the correct liability for each person in accordance with the law .There are no bonus payments based on tax take you know .
@@annewalden3795 Yeah,you carry on believing that,i'll stick to not trusting anybody.
Thank you. Very interesting presentation. I liked your method of delivery and contents explanation. Well done.
I see the rising interest rate as a very big problem, as more investors will definitely pull out more money from the Stock market. This might have worked when I was still invest-ing with a couple thousand dollars, but it is more difficult now to decide whether to pull out more than $365k from my port-folio. I know some inves-tors still make that despite the strong bear market. In wish I could pull that feat
I think the whole thing about holding stocks for long term will always apply. So I think you should get a quality broker who is able to analyze and pick stocks that will do well in the long term, else you will be in a long bear ride.
You have a very valid point, I started investing on my own and for a long time, the market was really ripping me off. I decided to hire a broker, even though I was skeptical at first, and I beat the market by more than 9%. I thought it was a fluke until it happened two years in a row, and so I’ve been sticking to investing via an analyst.
This sound interesting. I’m not really one to use pro analysts, but I guess it would not hurt to try one. My portfolio is in the red waters right now
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
She appears to be well-educated and well-read. I ran a Google search for her name and came across her website; thank you for sharing.
That was all crystal clear. Knew some of it already but had it confirmed. Best of all, learned a few new things. Thank you! Liked and subscribing.
Higher taxes = higher inflation = government subsides to quell inflation, The rising interest rate can surely control inflation, but won't prevent erosion of the eroding purchasing power of the US dollar. I have learnt my lesson this time. The banks can't be making money off my money, while inflation eats into it. I have set aside 650k to invest in the stock market now, since that keeps up with inflation, but I don't know how to get started.
Yeah, things may be hard right now, but I've come to realize both bear and bull market, recessions and economic boom, all provide opportunities to make high gains, I used to call bluff on folks that bragged about making a fortune from such down-markets until I happened to do so myself
Keeping money in the bank is like paying banks and the Government. Here's how it works: The bank gives out your money as loan, and charge interest obviously higher than inflation rate, and then give you, the depositor, interest lower than inflation rate. That means net loss for you. That is why I prefer to invest, and on average, my advisor makes returns that always beats inflation!
To be honest, I've been wary of banks for a while, but I wasn't sure how to speak with an advisor first. Please let me know who your adviser is if it's okay; I need some recommendations.
Finding financial advisors like "Rebecca Noblett Roberts" who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
I copied her whole name and pasted it into my browser; her website appeared immediately, and her qualifications are excellent; thank you for sharing.
I discovered some of these measures completely by accident and as far as I'm concerned HMRC and the government are sailing close to the wind of swindling. Most people have no idea. The people should simply complete their declarations of income and HMRC should calculate all the allowances from that, not the other way round as is, but that's not what happens. I abhor the whole rotten system. Thank you Carl for this brilliant explanation and in the way you have provided it. It would be grate if you could provide an email address. Thank you.
Thanks for your comments. You can contact me via RTSfinancialplanning.co.uk
Saving is for suckers.
Do what that the upper class do, study and buy investments, property and shares that at least keep their value with inflation or out grow it (profit). Property = land, buildings, precious metals, etc. Or an index fund. Inflation is a hidden state tax to steal savings, they don't want you to invest money. Retired, age 58.
Great ...... I forgot that premium bonds are tax free and gilts strategy you mention I am definitely going to do. I never looked at it from that perspective 😊
Most people save a portion of their income, which has already been taxed! Why would you be taxed on the interest?
The government encourages people to try and save money, but they shouldn't tax you after you've already paid interest!
Because they are greedy. They consider the interest gained from your savings account as your income. How is that an income though. They penalise good people who are trying to save some money for rainy days. But they reward lazy people.
Excellent Information. Thank you
I learnt something here, GILTS are CGT exempt. Awesome!
Me too 😊
Same here and I've been investing for 40 years! Now that I've retired I'm looking for those little edges which this video delivers. Thank you.
He said that the Gilt interest are not tax free. The strategy he pointed out was buying Gilts at a discount, but mature at their full face value.
Thanks Carl, this all sounds like useful information.
Very clear and helpful, especially on gilts.. Thank you.
Excellent summary ..thanks
My electricity consumption was high for the past few months..mainly due to the use of 2 dehumidifiers due to the weather. Thankfully it's summer and I can do some of my lightweight laundry by handwash to cut costs. 😅
Thanks very nicely produced video. It may need some revision following the next budget if the rumours are to be believed.
All a bit complicated for my mind but overall sounds good. I will have a look at my options. Thank you. 👍
The UK Treasury strip that supposedly would return 7.2% is not actually available to buy on HL. It can perhaps be purchased elsewhere but certainly not at that price.
HL wont trade strips, and I cant find anyone who will for a retail investor, I understand the banks will, if you are a member of their Wealth accounts and you will punt over £500,000. So I think this video is misleading.
Very good explanation, thank you
Most Tax is Theft, Starmer said in an interview a few years back that he only regarded Those people with OUT savings as working class, He is going to squeeze anyone with savings until the pips sqeek, get your money sorted now! Thank you for the video I have subbed
You are obviously forgetting the last 14 years , how much have the tories taken ?
@jeremyhares979 Too much. But this a hole is on another level, he wants my money to buy his votes from the unions, as demonstrated by his ridiculous give away of £5 Billion to train drivers and junior doctors, he is a dyde in the wool communist who will not happy until he bleeds us dry.
@@jeremyhares979
Thank you so much. Very informative.
Carl, Love the video and very informative. I always thought I was on top of the rules to avoid tax but have learnt a few more things 👍
Hi Carl, we're new to your presentations, great video,very informative thanks. We've looked at the HL site & App and there seems to be different types of Accounts. Which one would we need to sign-up to for us to be able to buy Gilts such as you recommend. A "Fund & Share Account" for example? Many thanks in advance!
Hi Carl, Great informative video, Can you let me know if there are still 0% short term maturity Gilts available to invest and where to buy them.
Great video, many thanks. Subbed and the bell has been hit! This year, 24/25, will be my first year where I go over the £1000 threshold for savings interest and therefore will be liable for tax. (Maxed out ISA etc) I am currently receiving the full new state pension and am employed full time. However, in December I am retiring and heading off overseas for a long time, maybe permanently???? I have been through gov.uk and HMRC but still have no idea how to make sure any tax is paid and I don't have any unpleasant surprises. (The tax should only come to £70/80 so I might as well get it out of the way) I have a spreadsheet detailing all interest received. I would greatly appreciate your advice on how to get this sorted. Many thanks in advance. Simon.
That was a very useful video….thamk you
You forgot to mention joint savings accounts, any interest earned is divided by two so it reduces individual interest earned.
Great point!
Things appear strange right now. The value of the US dollar is declining due to inflation, but it is increasing in comparison to other currencies and commodities such as gold and real estate. People are flocking to the dollar because they believe it is safer. I'm worried that rising inflation will cause my retirement funds to lose value. What else could we do with our money?
Personally, I would say have a mentor. Not sure where you will get an experienced one, but if your knowledge of the market is limited, it seems like a good bet.
Yes To be honest, investing is a smart way of securing your family future, grow wealth and beat inflation
That is true my dear, Investment is the best idea presently and without it, human struggles are worthless.
I agree to successful on investment. Having an investment advisor is the best way to go about the stock market right now. I was going solo, but it wasn't working. I've been in touch with an advisor for a while now, and just last year, I made over 80% capital growth minus dividends.
Please can you leave the info of your Investment advsor here? I'm in dire need for one.
"A fair tax is every bit as absurd as a fair theft"
Carl - discovered your channel today. Interesting video.
What do you advise if someone has £1m cash in savings?
Current interest rates provide a tidy monthly sum. But how to minimise tax with this lump sum?
I’ve maxed out flexible ISA and premium bonds already.
My fear is that the government will disapply the personal allowance in relation to interest on non pension or ISA interest
Great clear explanation. Please when making graphics avoid red green combinations. Thanks
Thanks Carl, very clear and concise. Look forward to future videos. Also like your presentation style.
Very helpful indeed, thank you!
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.
This is precisely why I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $800,000.
I appreciate the implementation of ideas and strategies that result to unmeasurable progress. Being heavily liquid, I'd rather not reinvent the wheel, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
Finding financial advisors like Marisa Breton Dollard who can assist you on things like investing, insurance, making sure retirement is well funded, going over tax benefits, ways to have a volatility buffer for investment risk would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Enjoyed that, thank you. Interesting listening to UK tax advice and comparing it to Australia. I presume your audience is mortgage free, as a sensible place to put our $ is in offset accounts...
Very informative 👍👍
Very informative. Keep it coming😅
More to come!
Thank you , some valuable information 😊
You can't purchase the UK Treasury Strip online that you used as an example with a Hargreaves Landsdown trading account.
Take your money out of the banks as its not really yours buy silver and gold and where does it say in law you have to pay tax in the first place tax office couldnt find anything
Or buy premium bonds and open multiple cash isas.
Brilliant! Perfectly explained! Thank you so much!
Excellent video, very clear. Thanks
I thought that the whole personal allowance (£1000 plus £17,500) could come from interest, and be tax free, if you earned nothing.
It can.
No it can't. It's £5000 if you don't work.
@@daveworthing2294you still get personal allowance if you don't work
@daveworthing2294 no, it can - and it it nothing to do with "work", just "income", which aren't as related as you might imagine.
You get 12570 in the nil rate income tax band.
Then you get 5000 starting rate for savings.
Then you get the same personal savings allowance as every other basic rate taxpayer does. [Edit: which is 1000]
@@alan_davis You've got it wrong. It's £5000 from interest, then you'll pay tax. Personal allowances don't come into it.
It’s stupid saying we shouldn’t hold cash and put it into shares if the world economy tanks so will the shares and uk finances are very closely linked !
That's a strip (you described it as a Guilt) and the capital gain is taxed on strips unlike Guilts.
Starmer thinks you're 'guilt'y for having savings and can get stripped of anything you own. Tax treatment of gilts?
Indeed, Google “DMO Tax strips” . All the gains on strips are taxed as income, negating the benefit stated. To avoid this use low coupon gilts like T26, the increase in value of those isn’t taxed at all, you just pay tax on the small coupon element.
Very useful. Can we have about gilts and more on cash pensions if you are 55+ can you use them as a pig bank so to speak.
Thanks.
open up a SiPP as there aren't any "admin" charges which regular pensions have
Hi carl, I have come into £30,000 to invest from family inheritance. I am putting around £200 a month into S&S isa and have £6000 ISA allowance left. If i was to put this money into cash savings i would end up paying tax on the interest. What would you recommend doing with the money? Do you think i should put the £6000 into S&S isa or into a LISA maybe? Any advice would be appreciated, Thanks
Great video. What about Venture Capital Trusts though?
Potentially an option if you understand them and have maxed out other wrappers first. You need an exit plan though as most VCTs are difficult to sell without large penalty.
Thank you for very useful information.
I have a rented property with my wife. Can I transfer whole property to my wife without any tax?
Thanks for the video. Please can you clarify the tax position for UK Strips? You have shown a Strip with coupon of 0.25% and potential 7.2% capital gain. Is this Strip subject to CGT?
I’ve pinned a comment at the top. In the video I didn’t realise it was a strip. Strip gains are subject to Income Tax but the principles for normal gilts with low yield at a discount still apply. No CGT.
Thanks Carl 👍
Very interesting and clearly presented, many thanks. I retire at the end of this month and will receive my tax free lump sum some time in August. I have plans for it in the next year or so but need somewhere safe to put it in the meantime. I was considering a NSI savings account on the basis that whilst not the best interest rate out there (nor tax free), it is 100% backed by the uk treasury, hence about the safest place I can think of. I have considered maxing out on premium bonds for a proportion of it, but there is no guarantee of any return from those and the NSI savings would at least keep my money more or less abreast with inflation at today's rate. 🤔 What are your thoughts on this option?
Very sensible. Anything involving gambling will just lose out. Pay your taxes and be a good citizen not like the money grubbing Tory party of the last government.
@@douglasfielder4621 Thanks for your feedback.
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account. I'm now seeking best possible areas or ways to gain wealth in today's economy.
Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.
Private investing is the best way to go about the market right now, especially for near retirees, I've been in touch with a wealth manager, netted 370K the last downturn, made it clear there's more to the markets than we average joes know.
Who is this Adviser or investor you use? I lost over 35000 already this year, I’m in need of a planner going forward.
My consultant is Jessica Lee Horst , experienced advanced lady and consults formanly brokerages hence is independent and can be a fiduciary to you.
very much appreciate this.. was able to look up Jessica by her full name and at once found her consulting page, she seems impeccable !
Priceless 🙏
What about if living in Scotland? Are the rules the same for tax on savings ?
Good video! Would the 25% pension lump sum count as income for the starting savings rate in the year(s) you take it, or is it exempt?
No it doesn’t count as income.
Not sure that the tax treatment for gilt strips is the same as for gilts 🤔
I like the idea of buy gilts as I never thought about that before. How did you know the final price would be £100.
All gilts are redeemed at their par value. They are sold in blocks of £100 par value so that is what will be paid at maturity.
@@paulcassidy8130 thank you for confirming that
Great advice
any guidance for not having savings in the first place? I know enough to understand that currency that isn't moving is losing buying power every second anyway but I don't know enough to know where to put it, for example into gold or stocks etc
Unfortunately, Hargreaves Lansdown tell me they will no longer allow individuals to buy UK Treasury Strip you refer to after ~12:30, despite listing it as available. Such a shame!
To save some people time, this video does not do what it says on the tin. It tells you, effectively, how to minimise your tax bill mainly by using all allowances available. For anyone who is reasonably well informed about personal finance there is nothing to see here.
Thanks for saving me the time
@@thomasbroker69 No problem. I’m afraid this click bait really is annoying. I’m sure this is useful for some people so why over claim for a few extra clicks !
Well until I watched this video I wouldn't know about premium bonds and guilt. And I'm grateful. Thank you.
I thought the money that people had saved up. Had already been taxed and the remainder. was yours . How many times do they want to tax YOU before they had taken it all .
They are taxing you on the interest that you have earned
How. Do I contact you please. You sound like a good financial advisor
Hi Mike. There is a link to the website on the UA-cam channel home page.
Tax man is a thief.
I have a 3 year fixed term savings account and am a basic rate tax payer. Interests are paid annually and are just under £1000. I’m now in year 2 and will change jobs in January, making me a higher rate tax payer.
Is there anything I can do to avoid paying income tax on interests over £500 and how do I treat the partial year of interest for tax calculations? The savings account was opened in July.
I am prepping for retirement next year and wondering about the £30,000 threshold. Would that mean a £30,000 pension income excluding State Pension?
Please excuse my question if it sound silly as I am totally new to this. How do you know the gilt you mentioned for £92.80 in the example will mature at £10 in 2025?
It will mature at £100, which is them repaying the principal that was loaned. All gilts and similar bonds work this way. Although as other comments note, the zero interest thing he shows is a ‘strip’ which is not quite the same but still pays out at the full value in the end.
Good advice 👍
Very interesting, thankyou.
how do I go about buying gilts - could I do it through my building society? Is there a fee involved?
Great video. Spot on. Thank you. On many people’s minds at the moment. One question: how do we set about buying gilts? I have an AJBell account. Can they help?
AJ Bell do allow you to buy GILTS, under shares and markets then other investments.
Thank you!
HL is not offering any more gilts. Where else I could buy gilt?
Where did you get the £100 maturity on UK Treasury Strip?
How does the average person go about investing in gold and what are the tax implications ?
Could do it via a fund or buy physical gold direct from the Royal mint.
@@carlrobertsifa I wold recommend Chards or Atkinsons bullion, they have better prices than RM.
I would disagree with you with regards your UK Treasury Strip not attracting tax. Strips are taxed on gains, not the same as Gilts
Premium bonds has much lower expected return than the prize rate. It all gets eaten up by the big prizes.
Except that those who win the big prizes get a much higher return.
@@mda5003 yes, but the *expected* return actually has a meaning taking that into account that you can look up if you care
What about pensioners. Getting lower rate pension.about under 20000
Savings just asking to know for my friend.
Can you confirm if I have this right regarding the pension carry forward rule?
If I earn over £60,000 that means that this year and last year I can pay up to £120,000 into my pension including employer contributions. Let's say over those two years I only pay in a total of £40,000 does that mean in the next tax year, if the rules stay the same, I could pay in the £80,000 shortfall and the £60,000 for that tax year even if in that tax year my earnings are say just £70,000. Basically if I come into some money , an inheritance or a premium bond win etc, can that be used to plug the shortfall from previous years or do you have to earn the money via PAYE.
You will only get tax relief on pension contributions up to 100% of gross income in the same tax year regardless of how much carry forward is available.
@@carlrobertsifa Thanks very much for confirming that for me 👍🏻
Not Sharing Money With the Partner. Adult Children And Grand Children And Teenage Son. Husband has to have his Own Account. He is 67 With his Own Money.❄️🎉❄️🎉
Great Video thank you!