AIBU to keep my inheritance in one bank account because of interest rate or am I naive

Thanks for replying. I thought the banks had stopped reporting figures to HMRC or am I wrong?

It's done through your tax code.

I earn over the threshold in interest in a savings account. I currently do tax returns due to previous freelance work but all my work is PAYE now. If I apply to opt out of doing a tax return, does anyone know how my tax will be deducted for the interest?

Worth repeating

I would move anything over the guaranteed amount into another account.
It's a small risk of the bank going bust but it's still a risk. And places that have been considered very safe have sometimes turned out not to be

It's 1000 pound for most people not 500. Most people don't earn enough to be in the higher tax bracket.

There are a large number of potential inheritees on here who don't care much about their parents' welfare because ££££

If you plan to spend it by August, ISAs, S&S ones especially, are not appropriate.

How much over the 120 are you?
The chances of a bank going bust without warning is very slim. So it depends on the amount ££ involved and your attitude to risk.

JP Morgan is a G-SIB. The likelihood of the US government (or governments) allowing them to fail is very slim

If the money is only going to be there a short while I would not worry.

Recollections may vary on the need for TARP money, and it is true that the US Government needed them to take it to ensure others followed...And also underwrote the forced take over of Bearns and a couple of other smaller, failing banks to the tune of, from memory, $30 or $40 billon. But if they hadn't done that or taken the money, and others then hadn't either, the system would liley have spiralled closer to the point of collapse and they too would have then needed it, at which point the cost of saving everyone then would have been stratospheric. So one could take the view that them taking it early was part of what then stabilised the system, meaning they didn't need more later. Three or four years down the line, once the dust had settled, their CEO claimed that they hadn't needed it and shouldn't have taken it...but one also could take the view that was him distancing himself from the very systemic failings that took them all to the brink.

But I do agree that a world in which JPM goes under we have bigger problems!!

Yeah £120k

It’s only protected up to a certain amount. If over that it’s far safer to spread it over accounts with different banks.

Personally, I wouldn't risk being over the £120k protected limit. I agree it's extremely unlikely that a bank will go under, but why take the risk? I'm sure there are other banks offering a similar rate. Although be careful because some banks are co-owned by the same banking group (e.g., Halifax and Bank of Scotland), so only covered up to £120k combined.

What does that even mean in this context. The money is protected by law. They said that is was a bank account not some sort of investment.

The only concern here is the tax liability for the interest earned. So the op could probably mitigate that, but if it's only going to be in there a short period beforebthey but a house then even that may not be so much of a big deal.

This isn’t really true. They reluctantly accepted TARP money which they didn’t need and had no use for. They were asked to buy Bear Sterns as a kind of private sector bail out of a weaker institution.

A world in which JPM goes bust is a world where we are huddling around candles eating cold tins of baked beans. It’s one of those things that’s is so bad there is no point worrying about it. I would 100% trust them above the UK government.

JP Morgan did in fact get close to going bust in the 2008 crash, and was bailed out by the US government to the tune of $25 billon from memory, and was paid more to buy Bear Stearns to bail them out too. So while the OP is almost certainly protected under the £1.4m limit for short term holdings associated with a house purchase, and its also unlikely JP Morgan will fail, given the current volatility and alleged manipulation of US markets its not impossible. From an absolute credit risk perspective, the UK government can always print more money to meet it's obligations, an option not open to JP Morgan!

NS&I don't have a maximum limit to savings.
They are backed by the government, unlike high st banks. You'd be able to open an account with them pretty easily as you already have pb's.

It depends how much over 120k you are? Is the money in joint names? how many accounts do you have with one institution?

Take a look at this, from Martin Lewis.
FSCS bank protection limit - Are my savings safe? - MSE

I got hammered for Tax, after I had money from the sale of my Late Mums flat. As the eldest it was paid into my Bank account. It wasn't there long as I had to give half to my sister, we then divide our half again to our kids. I was just waiting for all the outstanding bills etc, so not there that long.

My tax bill came in about 2 years later, they lumped it together with my pay., told me I had underpaid my tax

Please also make sure you update your Will and consider looking at Estate Planning to negate care home fees in later life and leave as much to your dependants as this is what we have chosen to do and it's because of Mum and Dad doing this that would have prevented the LA from swallowing the lot had Mum survived another 5 years.

I see this posted all the time. I work in healthcare in the community and visit many different types of care home. The ones that basic LA funded are usually horrendous and I cannot fathom this attitude.

Yes, check out the temporary high balance conditions. If you are protected then it’s probably not worth the effort of moving some of it around.

Does your higher interest rate cover the whole 120k?

You are covered up to 1.4mn for 6 months so no issue hereif it's recent and it's August 26

Not quite true. Your allowance is £1000 a year or more if you're a non tax payer.

I know it's quite hard to believe on MN but 'most people' don't earn over £50k pa. There's also the £20k cash ISA allowance and seeing as the OP says the money will be gone in August, she'll only earn interest for about 4 months.

If she's a basic rate tax payer, I make that the interest on over £80k will be tax free of tax due to the amount in an ISA and then earning interest that's not reaching the £1k this tax year. She could put the rest in PBs, but that's risky as it's only going to be in for the June, July and August draws at best, so disproportionately affected compared with just putting it in instant access and paying tax on the interest above the £1k.

It used to be 80k or something per banking group. I think it's gone up now to 100 and something.

That's the amount they'll guarantee to pay you back if it gets nicked. So try and spread it across a couple and make sure they're not in the same banking group. Like lots of banks are retail trading arms of other bigger banks.

Put what you can in isas./premium bonds
If you earning 12500+ or more in interest so be it. But should be taxed only on what you get in interest above your tax allowance plus other allowances . Unless paye adjusted due to last year?