Savings Guide for UK Savings Week 2023 - Part 3
We have covered some key areas of savings, but there is always more to think about.
A reminder of some questions that you can ask yourself before looking at savings products:
- Will you require access to your money at any point in the near future?
- Do you want a fixed rate that doesn’t change or are you happy to accept a variable rate that could go up or down at any point?
- Do you have a lump sum to invest or are you looking to save little and often?
- Do you have any other savings accounts and are there any tax implications/benefits on the interest that you are earning?
- Have you had a Cash ISA this tax year?
Any other savings accounts?
As stated above, it’s important to check your taxable allowances. There are restrictions on the number of Cash ISA’s that you can pay into in the current tax year as the interest that you earn on ISAs is tax-free.
The current tax-free allowance for the tax year 2023/24 is £20,000.
See our Guide to ISAs page for more information.
For other savings products where your rate is shown as AER/Gross you may have to pay tax, if you earn over £1,000 in interest. So, make sure you understand everything from www.hmrc.gov.uk before proceeding.
Have you had a Cash ISA this tax-year?
This is probably the most confusing area.
Each year you have a tax-free Cash ISA allowance, this runs from 6th April – 5th April, also known as the tax year.
You can only pay into one Cash ISA each tax year. If you open and pay into a Cash ISA with one provider, then want to move it to another you can complete an ISA transfer and the funds get moved.
The tricky part can come with monitoring ISAs that you have access to when it comes to ‘replacing’ funds.
See our Guide to ISAs page for more information.
Future you will thank you for it!
Hopefully, having understood your position whether you want or won’t need access to your money, understanding your fixed or variable rates, and now considering the potential tax implications on savings – you can now make an informed decision on where to put your savings.
As the economic climate changes, which it does very quickly, this will need to be something that as a consumer, you are aware of.
Ask yourself, ‘are my savings still in the right place for me?’
If your circumstances change at any time, you should in first instance, speak to your bank, building society or financial institution and explore what support they can offer you.
In conclusion, save your pennies, save the pounds, save little and often, save the lump sums, sacrifice your expertly crafted barista coffee (maybe have 2 a week instead of 5) or your monthly subscription to a streaming platform (obviously without any password sharing!) and let your money work for you.
I hope these guides have been useful in some way and helped people understand savings more. I’ve enjoyed writing them!
If you would like to read the other articles in the series:
Savings Guide for UK Savings Week - Part 1
Savings Guide for UK Savings Week - Part 2
