Are notice accounts a good option for savers?

Are notice accounts a good option for savers?

Notice accounts offer middle ground for savers who want something in between easy-access accounts and fixed-rate savings bonds

Stephen Little
Thu, 01/23/2020 – 17:09

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If you do not want to lock your savings away and want quick access to your money an easy-access account is normally the best option.

However, if you are looking to gain some interest on your savings and still have some flexibility you might want to consider a notice account.

These allow you to dip into your savings as long as you inform your bank in advance. You can earn a higher rate than with an easy-access account, but not quite as high as with a fixed-rate savings bond.

Typically, you will have to give advance notice of 30 to 90 days to your bank or building society before you take your cash out.

Some accounts are even more restrictive and may require notice of up to 180 days.

Notice accounts are good for savers who would like to make an occasional big purchase, but still want the benefit of receiving  interest. For example, they are useful if you are saving up to buy a car or a holiday later in the year.

However, if you are saving money for a rainy day and want to draw the money out quickly, a notice account may be too restrictive for you.

If you are looking to use the account regularly, it won’t be of much use as you will lose your interest.

The highest paying notice account is from the Bank of London and the Middle East at 1.71%. It comes with a 90-day notice period and can be opened online.

However, it requires £10,000 to open the account so might be out of reach for most savers. This account offers an ‘expected profit rate’ (EPR) instead of traditional interest.

The Moneybox 95 Day Notice account offers a rate of 1.65% and can be opened on your smartphone with a deposit of £1. Just behind at 1.6% is ICICI Bank’s 95-day notice account, which can be opened through the online Raisin savings tool with a deposit of £1,000.

If you are looking for a shorter notice period, the Secure Trust Bank 60 Notice Account has a rate of 1.5%. You will need £5,000 to open the account.

These accounts offer higher rates than the best easy-access account from Gatehouse Bank at 1.41%. It can be opened online with a deposit of £1,000 and there are no limits on the number of withdrawals you can make. This account also offers and EPR rate.

Notice accounts with the shortest notice periods tend to pay the lowest rates.

OakNorth Bank’s 35 Day Notice Deposit account has a rate of 1.2% while Aldermore’s 30-day notice account pays 1.3%. Both accounts can be opened online.

Cash Isa notice accounts

Notice Cash Isas give you greater flexibility over ordinary fixed Isas.

However, savers are increasingly finding their options for notice Cash Isas limited, while rates are also lagging behind their easy-access counterparts.

The Moneywise Best Buy is the Aldermore 30 Day Notice Cash Isa, which pays 1.3% to customers who give 30 days’ notice.

The account can be opened online with a deposit of £1,000. If you deposited £5,000, over a year you would earn £65 in interest.

The top-rated easy-access Isa is from Al Rayan at 1.36%. You can open this account with a deposit of £50.

If you deposited £5,000 in this account, you would earn £68 in interest over a year.

FEATURED PRODUCT

Moneybox 95 Day Notice Account

This account pays 1.65% interest and can be opened online. It has a 95-day notice period and requires a £1 initial investment.

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Consumer confusion about tax return expenses

Consumer confusion about tax return expenses

One in three people who do their own tax return could be paying more tax than they need to or risking a fine from HMRC because they don’t understand expenses, according to Which?

Emma Lunn
Thu, 01/23/2020 – 15:07

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The consumer champion surveyed nearly 1,300 Which? members about their experiences of submitting a tax return.

Of those who submitted a return, only four in 10 (39%) said they normally claimed expenses – meaning many could be missing out on expense claims that could help them save on their tax bill.

One in 10 (9%) felt their expenses were negligible, while half (49%) of those surveyed believed that they did not have expenses they could claim for. However, when presented with a list of potential claims that could be expensed, more than three in 10 (31%) said they didn’t know which could be claimed.

Those omitting expenses risk overpaying their tax bill. However, trying to claim for expenses that are not eligible for tax relief could potentially result in a fine from HMRC.

HMRC penalties

A penalty charge from HMRC is based on the amount of tax owed, as well as whether HMRC believes the person submitting the return has just been careless, or if they intentionally tried to claim tax relief they are not entitled to.

Among the responses illustrating the confusion, one person told Which?: “I just claim £104 – £2 a week. Someone told me the Inland Revenue just accepts a small amount like this without having to show your expenses. Don’t know if that’s true.”

Receipts and expenses

More than nine in 10 (93%) of those surveyed said that HMRC had never asked for additional information regarding their expenses claims.

However, Which? says you should keep a record of all your receipts and expenses in case you are asked for proof. One respondent to the Which? survey said HMRC requested seven years of all their income and expenses, while another said they were asked for a complete review, which took months to finish.

Gaps in tax knowledge

Last year, Which? revealed a number of gaps in consumers’ tax knowledge, with just over half of adults unaware of how much money can be earned tax-free.

Which? Money editor Jenny Ross says: “Few people enjoy the annual ordeal of submitting a tax return, but getting to grips with the rules will help you to avoid paying too much, or being hit with a hefty fine.

“Get organised by keeping hold of all your receipts and reading up on what HMRC considers as reasonable expenses, and think about using an online calculator to simplify the process of submitting your tax return.”

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