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Original poster

Easy access savings for non tax payer

9 replies

Zebresia25 · 27/05/2024 19:22

What type of account is best for my 90-year-old mother? She only has the state pension and does not pay tax. The savings are needed to supplement her income. Am I right in thinking that there is no point in her opening a cash isa?

OP posts:
ScoobyDoesnt · 27/05/2024 19:34

It depends on how much in savings you are talking about.

If she is likely to earn more than £1500pa in interest, then this will be taxable. So an ISA would be advisable for £20k this tax year, topping up each tax year if required.

CandidHedgehog · 27/05/2024 19:46

NS & I savings bond? This is not the same as premium bonds. I don’t know the interest rate now. An elderly relative of mine got in at over 6%. However, it’s taxable. I don’t know how much in savings we are talking about - that makes a difference.

Original poster
Zebresia25 · 27/05/2024 19:46

Thank you - that is helpful

OP posts:
WuTangGran · 27/05/2024 20:59

Zebresia25 · 27/05/2024 19:22

What type of account is best for my 90-year-old mother? She only has the state pension and does not pay tax. The savings are needed to supplement her income. Am I right in thinking that there is no point in her opening a cash isa?

How much?
Fixed term?
Easy access?

Original poster
Zebresia25 · 27/05/2024 21:03

@WuTangGran Some needs to be easy access. I am not sure of the amount atm. Maybe £50k

OP posts:
Bjorkdidit · 27/05/2024 23:07

Does she use the internet? I saw a Cahoot account paying 5.2% listed in the weekend papers but I think they're online only so needs internet banking.

If she gets 5% on £50k, that's £2.5k pa interest so some of it will be taxed, so definitely worth putting some in an ISA - perhaps put £20k in a 1-2 year fix for the best interest rate, then the rest in the best available instant access account that is operated in the most convenient way to her (internet, branch, phone etc). Look on Moneysupermarket for current best rates. Set up a standing order to pay an amount into her current account each month if she wants it to pay bills, buy shopping etc.

Also do a benefit check as if the state pension is her only income, and it's likely to be the lower rate due to her age, she's probably entitled to pension credit and other top ups - even if the PC award is small, it's a gateway to other help, eg CoL payments.

Original poster
Zebresia25 · 28/05/2024 09:06

@Bjorkdidit Thank you. I will look into pension credits

OP posts:
linkydinky · 28/05/2024 10:14

ScoobyDoesnt · 27/05/2024 19:34

It depends on how much in savings you are talking about.

If she is likely to earn more than £1500pa in interest, then this will be taxable. So an ISA would be advisable for £20k this tax year, topping up each tax year if required.

If she only has the state pension that's not correct. Have a look on MSE

https://www.moneysavingexpert.com/savings/tax-free-savings/

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