Active discussions

Please or to access all these features

Talk
AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Tax on savings??

67 replies

Bubblegum25 · 03/07/2024 19:09

I won't pretend to be an expert on the subject, and having read different articles/information online, I feel even more confused than I did before.

Can someone please explain to me how this will work if Labour are voted in?

My lovely dad gifted me 60k towards a house deposit around 8 months ago which I still have as the market is terrible where I am at the moment. The money is in a current account, not a savings account so not making any interest etc. I work full time on a low wage and currently rent alone so no chance of me ever buying a house without this money even though I do try and save myself (before people say I'm selfish or greedy). Will I be taxed on this?

Sorry if I sound stupid but I honestly haven't got a clue and it's all a bit confusing and worrying!

OP posts:
bigageap · 03/07/2024 19:28

Bubblegum25 · 03/07/2024 19:25

Definitely not a scare tactic. I've tried to educate myself but it's confusing. It's embarrassing to say but I don't really understand a lot of it and my friend mentioned it today as she knows I have money for a house so it's worried me.

I was aware of the inheritance tax, again not a 100% on how it works though.

I guess another question would be, what happens if you don't have the cash to pay inheritance tax (if I've already used it to buy a house)?

Take out a loan, increase your mortgage, sell the property.

BeanThereDoneIt · 03/07/2024 19:26

From your worry, it seems to me like you think you’ll be taxed on the savings themselves? That’s not the case. Any tax is only ever on interest you earn from the savings.

If it’s in a current account not earning interest then you have no tax to pay, and Labour have no plans to change this.

Original poster
Bubblegum25 · 03/07/2024 19:25

Definitely not a scare tactic. I've tried to educate myself but it's confusing. It's embarrassing to say but I don't really understand a lot of it and my friend mentioned it today as she knows I have money for a house so it's worried me.

I was aware of the inheritance tax, again not a 100% on how it works though.

I guess another question would be, what happens if you don't have the cash to pay inheritance tax (if I've already used it to buy a house)?

OP posts:
ConsuelaHammock · 03/07/2024 19:25

£20k in a money box isa asap. The rest in a high interest account and move another £20k over to your isa at beginning of next tax year. No tax to pay on interest from isas.

DancingPhantomsOnTheTerrace · 03/07/2024 19:19

Can someone please explain to me how this will work if Labour are voted in?

Currently, if you're a basic rate tax payer, you can earn £1,000 in interest in savings before paying tax (it's £500 if you're a higher rate tax payer). Neither Labour nor the Conservatives have said they will change this.

Didimum · 03/07/2024 19:17

If it’s not earning any interest, then you don’t have to worry about anything.

If you’re on a low wage (under £17k a year), then you can earn up to £5000 a year in interest tax free. If you earn over that on basic rate it’s £1000 a year maximum and on higher rate £500 a year max, £0 on additional rate.

This has nothing to do with Labour and I hope this wasn’t a fake scare tactic post.

Wakeywake · 03/07/2024 19:17

Stick 20k in an isa and the rest in a high interest savings account. You will pay tax on the interest, but better than no interest at all.

User364837 · 03/07/2024 19:16

I would recommend you put it in an ISA, you can do £20K straight away. You can check money saving expert but I found the money box one good (5.21%) and they have a simple saver for 5%. You can make withdrawals although there are limits. Especially the ISA you wouldn’t get taxed on it so no need to worry but you’re losing out on money by just having it sat in a current account!
you could also stick some in ns&i premium bonds, any winnings from that are tax free too and you can withdraw whenever you want.

Id probably do £20K cash ISA
£20K savings account (5% interest would take you to the £1000 limit)
£20K premium bonds

WeirdButFuckingBeautiful · 03/07/2024 19:16

OP will only have to pay IHT on the gift if her dad dies within 7 years AND he had used his £325k nil rate band immediately prior to making the gift.

Otherwise the gift will be covered by the nil rate band.

The balance of £325k-£60k will then be available to the Estate (assuming no other lifetime gifts that have used it in the 7 years prior to death)

Purplebunnie · 03/07/2024 19:15

I'm not sure but could you buy some premium bonds. I don't think you pay tax on your winnings. I'm sure someone can advise better re these

DogInATent · 03/07/2024 19:15

This reply has been deleted

Message deleted by MNHQ. Here's a link to our Talk Guidelines.

Missed the bit where you said it's in a current account. Why? You can set-up an instant access savings account in a matter of hours online.

JuneShowers24 · 03/07/2024 19:14

You should be paying tax on savings now.

Neveranynamesleft · 03/07/2024 19:13

You are allowed to earn a certain amount before you are taxed. You can get lots of helpful information about this on moneysavingexpert.com website in the 'savings' section.
You really need to get this money into an account with a decent interest rate, you are losing out, especially if you wont be using it for a while. Better in your pocket than the bank's.

DogInATent · 03/07/2024 19:13

This reply has been deleted

Message deleted by MNHQ. Here's a link to our Talk Guidelines.

Coffeerum · 03/07/2024 19:13

The more pressing issue is if you aren’t in a position to buy a property soon then put the money into an ISA at the bare minimum immediately. Between inflation and housing price increases your 60k is worth less every single day.

EsmeSusanOgg · 03/07/2024 19:13

You can put some of that money into tax-free savings (ISAs) but as poster said above, you will only be taxed on interest. Which will be very little in a current account.

Bluemincat · 03/07/2024 19:11

Unless you're a higher rate taxpayer you're only taxed on interest from savings above £1000 a year. I don't know if Labour will change things.

You do have to think about inheritance tax as if your Dad dies within 7 years of gifting you the money you will have to pay tax at a tapered rate. Inheritance tax starts at 40%.

Swipe left for the next trending thread