Due to some workplace news I discovered today, it appears that I am on the road to breaching into the 40% tax rate this tax year (and subsequent years). But only by a smallish amount.
I've some plans for the next 18 months that I was going to use HL Active Saving (unsheltered from tax), that I was hoping to stop contributing once this fills up at just under £20k, to get me annual interest of £1k (which would have been safe at 20% income tax band).
However, today's news has scuppered my plan.
Seeing two options (so far):
1. keep putting money in, and accept that above £500 of interest I will be paying 40% tax on
2. move enough money out of the Active Savings into something else so that I wont get taxed on that cash.
I've not used up all my ISA allowance this year so far (more than enough to move current funds into ISA), however this does mean opening a cash ISA and accepting the lower rates. Plus I'd rather just keep buying ITs with fresh money (which will deplete my current ISA allowance anyway).
So option 2 seems to be either ISA or NSI premium bonds? (while I'd rather put more into my SIPP, I'm actually trying to save the money for this 18 month time frame)
If I choose option 1, will I have to do Self Assessments from now on?
Has anyone got some words of wisdom for me about this? I think I see what I need to do, I just feel like I'd rather not do it.
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