Starting Rate For Savings

[mearnsfool]

A friend has received a £60,000 inheritance, she is retired and has a state and other small pensions of £14,500 in total at this time, she has no other income.

Her husband is started transferring £20,000 a year in shares to her that are not ISA protected in his ownership and she is going to use up her £20,000 annual ISA allowance with these shares in order to reduce his capital and increase her capital for inheritance tax reasons.

We looked at things and I advised if she used the Starting Rate For Savings re her inheritance and she opened a non ISA notice account she would receive around 4% interest circa £2,400 but if she used the local Lloyd's TSB branch she would get a bit less say £2,000 in interest.

That is pensions of £14,500 plus interest of £2,000. Total £16,500 which is within the £17,500 of Starting Rate For Savings envelope to not be taxed on savings. Over and above that she still has a further £1,000 tax free interest under her Personal Savings Allowance if required.

She went into the local Lloyd's TSB bank today and explained what she was wanting to do with one of their savings products. The savings advisor advised that the Starting Rate For Savings allowance did not exists. This advisor had been trained in advising savings products. My friend directed her to the webpage on gov.uk that details the "Starting Rate For Savings info".

The advisor said to my friend that no such thing exists after reading the advice on that page and further advised that only £1,000 of the interest she receives will be tax free.

It seems strange that the savings adviser did not have this knowledge.

[Gan020]

That is pensions of £14,500 plus interest of £2,000. Total £16,500 which is within the £17,500 of Starting Rate For Savings envelope to not be taxed on savings. Over and above that she still has a further £1,000 tax free interest under her Personal Savings Allowance if required.

To clarify £14,500 is £1,930 more than the income allowance of £14,500 which leaves £3,070 for the starting rate band.
So tax at 20% on £1,930 on income and tax at 0% on up to £3,070 and tax at 0% on the £1,000 starting rate band.

[mc2fool]

She went into the local Lloyd's TSB bank today and explained what she was wanting to do with one of their savings products.

Good grief, why? That was her mistake! Asking for financial advice from a high street bank's "Money Confidence Expert" is rarely the best idea.

Still, having done so and got such appalling ignorance of something that should be in the so called "expert's" domain -- and denial even when shown the evidence -- I'd get the "expert's" name and make a formal complaint to TSB*, detailing the experience and naming the "expert" and expressing dismay at their lack of training in the matter, not to mention their refusal to believe .gov.uk evidence!

* Not to the branch! But either through their online form or by writing to head office. https://www.tsb.co.uk/help/complaints/other-ways-to-make-a-complaint/

[mearnsfool]

She went into the local Lloyd's TSB bank today and explained what she was wanting to do with one of their savings products.

Good grief, why? That was her mistake! Asking for financial advice from a high street bank's "Money Confidence Expert" is rarely the best idea.

Still, having done so and got such appalling ignorance of something that should be in the so called "expert's" domain -- and denial even when shown the evidence -- I'd get the "expert's" name and make a formal complaint to TSB*, detailing the experience and naming the "expert" and expressing dismay at their lack of training in the matter, not to mention their refusal to believe .gov.uk evidence!

* Not to the branch! But either through their online form or by writing to head office. https://www.tsb.co.uk/help/complaints/other-ways-to-make-a-complaint/

I had already helped her to set up a notice account with OakNorth Bank at circa 4.3% or so but she did not want to put money in one of those "Internet Bank Things". She ended up getting 3.65% at Lloyds TSB as it was a local bank, well it is this month but for how long?

One saving grace for the adviser was she said why not put the money in OakNorth at that interest rate???

As you and I are both "Rate Tarts" we just have to accept not everyone thinks the same way.

[mearnsfool]

That is pensions of £14,500 plus interest of £2,000. Total £16,500 which is within the £17,500 of Starting Rate For Savings envelope to not be taxed on savings. Over and above that she still has a further £1,000 tax free interest under her Personal Savings Allowance if required.

To clarify £14,500 is £1,930 more than the income allowance of £14,500 which leaves £3,070 for the starting rate band.
So tax at 20% on £1,930 on income and tax at 0% on up to £3,070 and tax at 0% on the £1,000 starting rate band.

Thanks Gan020 for adding that clarification with regards to the tax treatment of the persons pension, I should have put in a similar explanation in my message.

[swill453]

The £5000 for Starting Rate for Savings isn't that well known, it's only fairly recently that Martin Lewis's stuff on interest taxation mentioned it.

Scott.

[mc2fool]

Good grief, why? That was her mistake! Asking for financial advice from a high street bank's "Money Confidence Expert" is rarely the best idea.

Still, having done so and got such appalling ignorance of something that should be in the so called "expert's" domain -- and denial even when shown the evidence -- I'd get the "expert's" name and make a formal complaint to TSB*, detailing the experience and naming the "expert" and expressing dismay at their lack of training in the matter, not to mention their refusal to believe .gov.uk evidence!

* Not to the branch! But either through their online form or by writing to head office. https://www.tsb.co.uk/help/complaints/other-ways-to-make-a-complaint/

I had already helped her to set up a notice account with OakNorth Bank at circa 4.3% or so but she did not want to put money in one of those "Internet Bank Things". She ended up getting 3.65% at Lloyds TSB as it was a local bank, well it is this month but for how long?

One saving grace for the adviser was she said why not put the money in OakNorth at that interest rate???

As you and I are both "Rate Tarts" we just have to accept not everyone thinks the same way.

Yes, I accept that, but it's more difficult to accept a bank having a supposed expert savings adviser who not only doesn't know some (I'd have thought) basic facts about the taxation of savings, but also goes on to deny them even when presented with the evidence!

Honestly, at that point (after being sure to get their name) I'd have just said that I couldn't possibly trust their advice and walked out saying I'd be taking my business elsewhere.

[AJC5001]

She ended up getting 3.65% at Lloyds TSB as it was a local bank, well it is this month but for how long?

Just to avoid confusion, do you mean Lloyds Bank https://www.lloydsbank.com/ (The one with the horse )
or TSB Bank https://www.tsb.co.uk/ I can't find a 3.65% account on either.

Lloyds parted from TSB many years ago.

Adrian

[mearnsfool]

She ended up getting 3.65% at Lloyds TSB as it was a local bank, well it is this month but for how long?

Just to avoid confusion, do you mean Lloyds Bank https://www.lloydsbank.com/ (The one with the horse )
or TSB Bank https://www.tsb.co.uk/ I can't find a 3.65% account on either.

Lloyds parted from TSB many years ago.

Adrian

Not wanting to get the person into trouble due to poor training by the Bank, It was TSB and it was one of their one year bonds.

[mearnsfool]

The £5000 for Starting Rate for Savings isn't that well known, it's only fairly recently that Martin Lewis's stuff on interest taxation mentioned it.

Scott.

Scott, the £5,000, 0% tax allowance on savings above the personal allowance for low earners stated in April 2015. The personal allowance then being £10,600.

Plenty time for bank savings advisors to be trained up.

I wonder if the banks are worried about giving financial advice to members of the pubic if they get involved in going through their customers actual incomes and then suggesting that the customers can use that allowance.

Possibly just going a bit too far on the financial advice side??????

[swill453]

The £5000 for Starting Rate for Savings isn't that well known, it's only fairly recently that Martin Lewis's stuff on interest taxation mentioned it.

Scott, the £5,000, 0% tax allowance on savings above the personal allowance for low earners stated in April 2015. The personal allowance then being £10,600.

Plenty time for bank savings advisors to be trained up.

Oh I know that. I guess in that timeframe the interest rate has, until recently, been pretty minimal. So there wasn't much call for advice in that area.

Scott.