Due to the fact that 2&3 year rates are only about 0.25% higher, I think that 4.6% might be as good as we are going to get.

Especially interesting for both basic rate and higher tax rate payers, I’ve seen a 5 year fixed isa at 5.05% and the interest can be paid into your nominated account if you need the income. Excellent tax free income above the standard 4% ‘Safe Withdrawal Rate’ retirement strategists.

Bit like the old days.

I don’t want to commit for any more than 18 months. I will be using HL active savings for the first time as I am so fed up with all the hassle from my bank when I try and move large amounts in and out of my account

Perhaps a silly question but I’ve never used a savings account due to the low rates in recent years.

For non-ISA accounts, how is the taxable gain calculated if the fixed term is longer than 1 year, and interest only paid at maturity? For example, let’s say I put down £10k and am a higher rate tax payer with £500 annual allowance. Ignoring compounding, it generates a total of £1000 in interest, paid at the end of the 2 year fixed period.

Does the £1000 interest exceed the £500 annual allowance because 2-years’ worth of interest is paid at maturity? If so, then it would be more tax efficient to opt for a product that pays annually?


I assume this is because it makes the above calculation simpler for people looking to avoid the annual allowance tax issue?

I think it's more of a marketing thing to make a headline rate look larger than the return actually provides.

For example:-

Investec
Account Information
Interest rate
4.75% AER
Does the interest compound?
No
Interest £1,900.00

QIB
Expected profit rate
4.75% AER
Does the profit get reinvested?
Yes
Interest £1,945.13

Both thus have the SAME AER but different returns

(QIB use the term reinvested not compounded as its a Sharia account)