Paid Members gmoney Posted August 22, 2020 Paid Members Share Posted August 22, 2020 (edited) 1 hour ago, MPDTT said: Hi @hallicks. They are great products, but a word of warning - if something unforeseen happens and you need to withdraw the money for any reason other than buying a house, you will sacrifice the bonus in full (fair enough), but the thieving tax man will also scalp 25% of your whole pot if you withdraw before aged 60 - and I think that's daylight robbery!  No.that isn't quite true, you're not charged and extra 25%, you are effectively losing more than the bonus, but it's not an extra 25%. From the money saving expert: Imagine you saved £1,000 by April 2021 and so got a £250 bonus (due in May). So you'll have £1,250 total (ignoring interest, for ease). If you withdrew it in June, and closed the account, the 25% penalty would be £312.50. So you'd get £937.50 back. The way the maths works out is withdrawing for reasons other than buying your first home or retirement loses you 6.25% of what you contributed. Also, until April 2021, the penalty is only 20%, which means you would only lose the bonus. I hope you don't do HR at an accountancy firm! Edited August 22, 2020 by gmoney Quote Link to comment Share on other sites More sharing options...
Paid Members Ronnie Posted August 22, 2020 Paid Members Share Posted August 22, 2020 (edited) There's little to be said for moving money about each year too. That's a fiddly process. In my case, it will involve new apps and log-ins on my phone, etc. Assuming he's able to put aside the maximum £4000 a year, hallicks will get a bonus of £1000 to bring him to £5000. What's 1% of that? £50. He'd be getting around £20 anyway. If he's saving for a house deposit, then I presume he'll want to be spending his money within the next couple of years. We're not talking long-term compounding of anything extra he can obtain now. Is all the fuss of moving in year two worth it for £30 more than he'd have got anyway? Ultimately, it's an insignificant amount in view of what he'll have to be saving and what he'll need for a deposit. Edited August 22, 2020 by Ronnie Quote Link to comment Share on other sites More sharing options...
MPDTT Posted August 22, 2020 Share Posted August 22, 2020 38 minutes ago, gmoney said: No.that isn't quite true, you're not charged and extra 25%, you are effectively losing more than the bonus, but it's not an extra 25%. From the money saving expert: Imagine you saved £1,000 by April 2021 and so got a £250 bonus (due in May). So you'll have £1,250 total (ignoring interest, for ease). If you withdrew it in June, and closed the account, the 25% penalty would be £312.50. So you'd get £937.50 back. The way the maths works out is withdrawing for reasons other than buying your first home or retirement loses you 6.25% of what you contributed. Also, until April 2021, the penalty is only 20%, which means you would only lose the bonus. I hope you don't do HR at an accountancy firm! You're right, I am wrong, I misunderstood - my apologies.  The old Help To Buy ISA was a better product (closed in 2019 I think), because there was no penalty on withdrawal - just loss of bonus. If I had paid more attention at school I may have gone into Finance - numbers are supposedly easier to manage than people! Quote Link to comment Share on other sites More sharing options...
MPDTT Posted August 22, 2020 Share Posted August 22, 2020 (edited) 25 minutes ago, Ronnie said: There's little to be said for moving money about each year too. That's a fiddly process. In my case, it will involve new apps and log-ins on my phone, etc. Assuming he's able to put aside the maximum £4000 a year, hallicks will get a bonus of £1000 to bring him to £5000. What's 1% of that? £50. He'd be getting around £20 anyway. If he's saving for a house deposit, then I presume he'll want to be spending his money within the next couple of years. We're not talking long-term compounding of anything extra he can obtain now. Is all the fuss of moving in year two worth it for £30 more than he'd have got anyway? Ultimately, it's an insignificant amount in view of what he'll have to be saving and what he'll need for a deposit. Right now, you are correct. Interest rates are derisory and for most types of accounts not worth considering - an account is simply somewhere to store your money. Longer term, hopefully interest rates rise - but given the national debt, I'm not holding my breath. I do move my savings from time to time, usually annually, in the same way I move my insurances, broadband, TV or energy provider etc - all these institutions count on the customer not switching so they can offer worse terms to those being loyal - to the detriment of the consumer. Each individual switch might not be worth big money - but they all add up.   Edited August 22, 2020 by MPDTT Quote Link to comment Share on other sites More sharing options...
Paid Members gmoney Posted August 22, 2020 Paid Members Share Posted August 22, 2020 24 minutes ago, MPDTT said: You're right, I am wrong, I misunderstood - my apologies.  The old Help To Buy ISA was a better product (closed in 2019 I think), because there was no penalty on withdrawal - just loss of bonus. True, though it's not quite as simple as that. The Lifetime ISA is also a retirement product, so it's not as specialised as the old Help to Buy ISA. The Lifetime ISA is a pretty fantastic for retirement, provided of course that you don't end up needing that money early. Quote Link to comment Share on other sites More sharing options...
Paid Members Tommy! Posted August 22, 2020 Paid Members Share Posted August 22, 2020 1 hour ago, gmoney said: The Lifetime ISA is a pretty fantastic for retirement, provided of course that you don't end up needing that money early. I'd second that, especially with rates and general returns on other mid to long term savings being so low at the moment. I can see some people getting caught in a trap of being "retired" early though no choice of their own but having to find a way to bridge the gap if they are relying on that and a workplace pension however. Quote Link to comment Share on other sites More sharing options...
Paid Members Tommy! Posted August 22, 2020 Paid Members Share Posted August 22, 2020 3 hours ago, MPDTT said: All these accounts are protected by the Financial Services Compensation Scheme, so the first £85,000 of savings per person is protected by the government - meaning it doesn't matter if you go with a major institution or a provider who is more obscure Double post ~ To be clear that's 85k per institution not per product I believe, so having two 80k pots with one bank only covers 85k, not 160k.  Quote Link to comment Share on other sites More sharing options...
MPDTT Posted August 22, 2020 Share Posted August 22, 2020 33 minutes ago, Tommy! said: Double post ~ To be clear that's 85k per institution not per product I believe, so having two 80k pots with one bank only covers 85k, not 160k.  Correct. Anyone fortunate to have more that 85k in one institution should move some. Quote Link to comment Share on other sites More sharing options...
Paid Members Ronnie Posted August 23, 2020 Paid Members Share Posted August 23, 2020 15 hours ago, gmoney said: The Lifetime ISA is a pretty fantastic for retirement, provided of course that you don't end up needing that money early. For clarity because other people won't know this: although the Lifetime ISA is a tool for creating a retirement pot, you don't have to wait until the legal retirement age to access it. Once you hit 60, you can withdraw the money without breaching the terms. Quote Link to comment Share on other sites More sharing options...
Sphinx Posted March 18, 2022 Share Posted March 18, 2022 I changed jobs in November and have realised I'm on an emergency tax code. I let HMRC know yesterday and have had an email saying that the tax code has now changed. I'm trying to work out when I'll get a rebate but have seen different things - one saying by letter around September, HMRC saying around May/June (though he was generally pretty unhelpful and just wanted to get me off the phone), and another thing online from HMRC saying by my employer by wage slip after the tax code has changed. I don't suppose anyone has much experience with this? I'm trying to budget for the following months and knowing how much rebate there'd be would be handy. Quote Link to comment Share on other sites More sharing options...
Paid Members Bus Surfer Posted March 18, 2022 Paid Members Share Posted March 18, 2022 (edited) If you are due to be paid before the 5th April and your employer has recieved the new code with enough time to implement it before payroll cut off, any refund you are due will be paid into your wages. If not, you'll be refunded several weeks/months (hard to say) after the end of year details are submitted to HMRC.  Edit - Was the code BR? Edited March 18, 2022 by Silky Kisser Quote Link to comment Share on other sites More sharing options...
Sphinx Posted March 18, 2022 Share Posted March 18, 2022 Cheers for that, that clears things up more. It was on an emergency code but has now been put onto BR. Quote Link to comment Share on other sites More sharing options...
Paid Members Bus Surfer Posted March 18, 2022 Paid Members Share Posted March 18, 2022 Just now, Sphinx said: Cheers for that, that clears things up more. It was on an emergency code but has now been put onto BR. The term 'emergency code' tends to strike fear into people, but it just taxes you based on it being the first week/month of any tax year. If you've been put onto BR this is actually worse as you're not getting any tax free allowances before tax is calculated. Providing you're not a higher rate taxpayer, BR is generally used to tax a 2nd job at the basic rate (because your tax allowance is being used at the first job or elsewhere) If this is your only job you shouldn't be on BR and the BR code will not be giving you any refund in your wages. Quote Link to comment Share on other sites More sharing options...
Sphinx Posted March 18, 2022 Share Posted March 18, 2022 7 minutes ago, Silky Kisser said: The term 'emergency code' tends to strike fear into people, but it just taxes you based on it being the first week/month of any tax year. If you've been put onto BR this is actually worse as you're not getting any tax free allowances before tax is calculated. Providing you're not a higher rate taxpayer, BR is generally used to tax a 2nd job at the basic rate (because your tax allowance is being used at the first job or elsewhere) If this is your only job you shouldn't be on BR and the BR code will not be giving you any refund in your wages. Ah, I might need to ring up again then. One thing I did think was by November I imagine I'd have passed the personal tax allowance so would be expecting some tax but not as much as I'd been on. By going on BR, I wondered if it was because I'd 'spent' my personal tax allowance. Quote Link to comment Share on other sites More sharing options...
Paid Members Bus Surfer Posted March 18, 2022 Paid Members Share Posted March 18, 2022 (edited) 13 minutes ago, Sphinx said: Ah, I might need to ring up again then. One thing I did think was by November I imagine I'd have passed the personal tax allowance so would be expecting some tax but not as much as I'd been on. By going on BR, I wondered if it was because I'd 'spent' my personal tax allowance. Your tax allowance is generally split equally over the 12 months or 52 weeks (depending on how you're paid) of the year. Purely for the reason so that you don't not pay anything early in the year and get hammered at the end. If this is your only job and you don't have any additional expense allowances or deductions your code should be something like 1257L (may not be 100% accurate as I haven't worked PAYE for some time) I'd get back on the phone and explain this is your only job. HMRC may have missing employment info for you which is why they haven't been able to issue you a cumulative code. When leaving jobs, always get your P45 ASAP and hand it in to your new place. It's the best way to ensure your info is upto date and you don't get stung. Edited March 18, 2022 by Silky Kisser Quote Link to comment Share on other sites More sharing options...
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