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Personal finance - saving your money

Earning money is important, but so is saving the income you've earned. In the third feaure in our series on personal finance, accountant Martin Murray surveys the field

Earning money is important, but so is saving the income you've earned. In the third feaure in our series on personal finance, accountant Martin Murray surveys the field

The high street banks and building societies try not only to lend money but also to entice us to place our hard earned savings with them. The Government by way of various certificates try the same tactic to fund government spending. These products are too numerous to describe on an individual basis but can be categorised under various headings

Bank and Building Society Accounts

Probably the most familiar type of method that you will associate with savings.

These accounts can be instant access or require a period of notice before funds can be withdrawn.

The biggest problem is to find out information about the accounts without having to go around all the various branches. There two very good web sources for information these being www.moneyextra.com and www.moneysupermarket.com . For those of you who prefer more traditional methods of obtaining information, then the Saturday edition of the Financial Times is an excellent source, together with the Sunday Times itself.

Having sifted through all the details you may be surprised to find that the Post Office is a very competitive player. It offers a high rate of interest with instant access.

For those who can take advantage of their spouse's lower rate of tax, then accounts can be in their names. In some cases joint access is allowed if the bank or building society mandate allows.

Mini Cash ISA

Simply put this is a saving account with an upper ceiling of £3,000 pound per tax year saving with the interest free of tax. This applies even if you are a higher rate tax payer.

Children Trust Funds and Accounts

Start them young and get them into the habit of saving. At least the Government has tried this with the Children Trust Fund for all children born after September 2002.

A £250 voucher is available to start an account and each year up to £1,200 can be contributed. The account belongs to the child and cannot be touched until he/she reaches 18 years old.

In addition or as an alternative an ordinary saving account can be opened for the child providing flexibility in that withdrawals can be made at any time. Indeed the child will still have his/hers personal allowance and as such should not pay any tax unless the interest exceeds £5,225!

Offshore Accounts

You do not have to be non-domiciled to take advantage of these accounts which after currency fluctuations may provide a better rate of return. If you are domiciled in the UK for tax purposes, the gross interest paid is still liable for tax even if it is not paid over or received in the UK. For domiciled doctors advice should be obtained for your accountants.

National Savings

A wide variety of saving products is available from the Government including the Premium Bond which should not be ignored as a way of saving. Details can be found at www.nsandi.com which provides a comprehensive list and explanation of all the schemes. Some of my clients use premium bonds to save for tax as the more you hold the greater the chance of winning. Well life is a gamble!

Pensions

Finally, remember pensions are a savings vehicle for which tax relief is available and with the new pensions announcements made on 21st September 2007 serious consideration should be given to Added Years.

Before deciding on any investment whether it's a building society account or a pension contribution advice should sought either from your accountant or financial adviser.

Martin Murray is a partner at Sandison Easson & Co , specialist medical chartered accountants, Wilmslow , Cheshire, and Harley Street , London

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