Fixed-Term Saving Accounts
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The name of this bank account pretty much sums up what it’s all about. But if, like us, you thrive on clarity, here’s the deal: Stash your cash in an account for a fixed term and receive interest. The longer you leave it there, the more interest you’ll get. End of.
These are offered by most UK banks and come with a £85,000 balance protection promise (under the Financial Services Compensation Scheme). Not bad right? But to get the best deal you’ll need to shop around. If you’re more impulse shopper than bargain hunter, don’t panic, we’ve found the Best Paying Saving Accounts.
Will I pay tax on the interest I make?
Any interest is treated as income and gets taxed as income (similar to tax on your salary). HOWEVER, the government launched a personal saving allowance (PSA), which allows basic tax payers to earn £1,000 interest a year tax-free and higher-rate tax payers £500 a year. If you’re an additional-rate tax payer, I’m afraid there’s no PSA for you.
MOXI Tip: If you’re over your PSA allowance, look for a Cash ISA to avoid paying tax on the extra interest you are earning.
Help! What’s my income tax bracket?
|Your Income||Band Name||Tax Rate|
|Up to £11,850||Personal Allowance*||0%|
|£11,851 to £46,350||Basic rate||20%|
|£46,351 to £150,000||Higher rate||40%|
|Over £150,000||Additional rate||45%|
*If you earn over £123,000 a year you don't get a Personal Allowance and all your income is taxed.