Preparing For A Gap Year

Those who wish to take career breaks or have a year out in between studies to explore far-flung corners of the globe will embark on what is known as a gap year. Not just limited to students anymore, more of us head off seeking adventures every year, usually to backpack around locations such as South-East Asia, South America and Australia.

A gap year can also be spent touring, especially if you like to drive. The long and winding highways of the United States are a popular destination for these kinds of trips. Volunteering is also a popular reason for taking a gap year, with organisations offering excursions all over the world to help with nature conservation and humanitarian matters such as constructing schools and digging wells.

Pick Somewhere

During a gap year, the world is your oyster. Now it’s a case of deciding where to dip your toes first, do you want to start in one part of the world and end up at another along the line, or just take your time exploring like a nomad?

After you’ve decided on where to start your journey, it’s time for the research to begin:

  • Research the countries you want to visit; and not just the tourist attractions either, take the time to familiarise yourself with the culture and traits of where you are going.
  • Brush up on your languages; look into phrase books and smartphones apps that can help you to get along in your country of choice.
  • Note down the locations of your country’s embassies in the country you are travelling to in case of an emergency for which you require assistance.

Make A List And Double Check It

When preparing to take a gap year, it’s important to make yourself a checklist before you go, ensuring that you have all the correct documentation needed and enough money and clothes to see you through at least the beginning of your journey.

Important Documents

Before you travel you need to make sure you are covered in case of any incidents which might happen during your travels, including falling ill and getting injured, so it helps to have the following:

  • Passport – the most important thing you should have during your trip – you can’t travel without it after all.
  • Travel insurance – vital to have in case you fall ill or get injured during your journey. Talk to an insurer about a gap year travel insurance policy, which can help to provide cover for the duration of your trip.

Bear in mind though that there may be some locations where insurers will either charge a little more or not cover you at all because of an increased risk, so pick your destinations carefully when planning your trip.

  • Health cards (including EHIC cards) – if you’re travelling within Europe, a European Health Insurance Card can help should you fall ill as it entitles you to access to treatment in countries within the EU.

It should be noted that an EHIC card is not a substitute for travel insurance, and should always be carried alongside a travel insurance policy to provide an extra level of protection.

  • International Driving License – if you’re looking to drive during your trip, you must have a valid International Drivers’ Licence, which is recognised all over the world and can help with getting rental car access.

Also, if you’re currently studying and have a National Union of Students (NUS) card, it can be worth taking this with you as a just-in-case. Some tourist attractions around the world may offer a discount for students, so it can be worth taking along and trying out!

Staying Safe

It’s best to be prepared for any situation when you go away, so packing a small medical pack before you travel is essential to your preparation for a backpacking trip.

Medical kits are available to buy at airports, and it can be worth looking into buying supplies once you get to your destination. Ensure that you declare any prescription medication you’ll be taking with you on your trip, as well as the prescription itself, and be sure to identify where your local pharmacy is in your destination should you need a repeat prescription during your trip.

Before you travel, book an appointment with your GP for a health check, and find out if you require any vaccinations for the countries you wish to visit. Diseases such as malaria, hepatitis or glandular fever usually will have an inoculation before you travel or a course of medication during your trip.

Find out as well if you require any medication as a result, including anti-malaria tablets, and be sure to stock up before you go.

Keep Clean Before You Carry On

Take a wash bag with you with a variety of items to keep you clean during your trip – including a toothbrush, hairbrush and wet wipes among others. Because airlines only allow a certain amount of liquids on your person during a flight, it can be worth seeing if you’d be better off buying items such as soap, toothpaste, shampoo and shaving cream once you get to your destination.

Finance

Budgeting is essential when it comes to a worldwide trip; you don’t want to fall short and be stranded far from home with no means of paying for a way to get home. So what options do you have when it comes to making sure you can afford things?

  • Save

Financial preparation is an essential part of a gap year experience, from saving for the flight to getting jobs during the trip to pay for food, lodging and your plane ticket home.

If you’re saving for a trip, think about taking out a separate savings account to drop a little of each wage packet each month, you’d know then that you can accumulate a good amount to travel with.

When it comes to buying flights, shop around, and be sure to research gap year companies who may offer your flight out to your starting destination as part of the price of their package.

  • Use a pre-paid card

Pre-paid credit cards allow you to load up a card with a certain amount of money, which essentially becomes your holiday budget.

Using a pre-paid card saves you the need to carry a large amount of currency on you at any one time, reducing your risk from thieves who might steal your wallet during your trip.

  • Take a mixture of currency to begin with

However, depending on where you are going, you might be crossing several countries during your travels. It can be worth taking an amount of each countries’ currency as loose money, especially for buying items such as food and clothing as not all places accept a contactless card.

Don’t Pack Too Much At First

When you’re starting out on a trip, “less is more” can be a good philosophy to stick to, depending on where you’re going. You can always buy more clothes while you’re there of course, but be sure to take enough for at least your first few weeks, or until you locate the nearest laundrette.

The Advantages of Professional Financial Advice

Retirement can be a time to indulge yourself if you plan it well in advance.

Travel to a dream destination; learn a skill that you always wanted to or fulfil other wishes that you never got time to attend to.

However, you still have one important decision to make. In fact, it may well be the single most crucial decision that you will make for the rest of your life.

What should you do with your pension pot that you have accumulated after years of working hard and making sacrifices?

Decisions regarding retirement income were always a complex one. It has become all the more complex after the new pension freedom rules came into effect in April 2015.

If you are at that juncture in life and are unsure about which way to go, then it’s time to seek professional financial advice.

Why you must get help

You will have to decide how you are going to use your pension pot. And there are a lot of different options. Some are simple, others are complex. But not all of them will suit your financial circumstances and your attitude to risk.

To add to this, there are many questions which you need to answer to be able to make the right decision.

Do you know what questions to ask?

Further, do you know what option to choose if you get the answers to these questions?

  • There are more options than ever. You can take larger sums in cash or choose to invest outside the pension. Some of these choices may be risky if you are not too careful with it.
  • If you are not aware of all your options, you may well buy a poor value annuity which may leave you with a much lower income than what you are eligible for.
  • If you choose to leave your money as cash, you may receive dismal interest rates and may not maximize its complete potential
  • There are a large number of fraudsters who are out to make a quick buck via Pension scams. Most of them will try to take advantage of the ‘Knowledge-Gap’ that people have about the radical changes to the pension rules.

These are, of course, just some of the reasons why you must seek professional help. The most important reason is that you must be able to receive an income during your retirement years that will provide you with the kind of lifestyle that you wish for.

Free Professional Advice

The government now provides free financial guidance for retirees through the Pension Wise service. It is run by professional financial experts and volunteers who have considerable expertise and skill handling complex issues pertaining to pensions.

There are multiple ways to reach Pension Wise.

  • You can schedule a face-to-face appointment with them by calling on 0300 123 1047.
  • You can log on to their website and use their web chat function to speak to a financial expert
  • You can also call them on the above number and schedule a telephonic guidance session

While the pension wise service can be used as a good starting point that will be informative, it cannot be considered enough.

Read our post on Understanding Pension Wise.

Professional Financial Advice 

A professional financial advice will be a paid service. Advisers are bound by a code to reveal to you beforehand what the service will cost and what advice will be covered.

According to the Association of Professional Financial Advisers (APFA), the average cost of professional advice will be around £150 an hour.

Is this cost justified or are you better off buying what your pension provider is offering you?

Think about it this way. If you spend this money now, you will receive sound professional advice that is tailored to meet your financial objectives and to match your personal circumstances.

Also, the financial advisor will ensure that they will clarify the pros and cons of each option that you have.

The ideal time to speak to a financial advisor is at least six months before you retire.

Are you looking for a professional financial advisor? Read our article, ‘How to Select a Financial Advisor’ for more information.

 

Guide to Annuity Jargon

If you find yourself at your wit’s end trying to figure out the meaning of certain ‘terms’ in your pension manager’s sales pitch, you are not alone.

A lot of retirees face the problem of having to deal with an abundance of technical jargon when they first speak to insurance experts.

Unless you work in an insurance company or are a qualified financial adviser or have read about these things, it is normal to be confused.

Here’s our guide that should help debunk these arcane terms about annuities.

  1. Annuitant: The annuitant is the person who purchases the annuity
  2. Escalating Annuity: A type of annuity in which your income increases by a set percentage every year which can be specified by you. The higher the percentage you select, the lower your monthly payout will be initially.
  3. Index-Linked Annuity: A type of annuity in which your income will rise in line with rising prices (inflation). Either the Retail Prices Index (RPI) or the Consumer Prices Index (CPI) is used as a reference.
  4. Compulsory Purchase Annuity: It was compulsory for every citizen to purchase an annuity before the age of 75. This rule was changed in April 2006. Hence, the term Compulsory Purchase Annuity is an obsolete one.
  5. Capital Protected Annuity: A type of annuity in which your entire pension pot will be returned to a nominated beneficiary in the event of your death before a set time period. The returned amount will be subject to 35% tax.
  6. Enhanced annuity: A type of annuity with higher rates offered to retirees who may have a shorter life expectancy due to certain medical conditions or lifestyle-related conditions. For example, people with cholesterol, cancer, those who smoke or those who have recently quit smoking may be eligible for it.
  7. Guaranteed Time Period: A specified time period (5 or 10 years) for which, your annuity payment will be paid even in the event of your death. You can choose whether you want the remaining payment to be paid as a lump sum or as a regular income.
  8. Investment Linked Annuity: A type of annuity in which one part of your pension pot will be used to provide you with a low minimum guaranteed payment. The remainder will be invested in funds and the further income provided will be variable.
  9. Joint Life Annuity: A type of annuity in which your dependent spouse, civil partner or children will continue to receive the annuity payment for the rest of their life or a set time period, in the event of your death.
  10. Single Life Annuity: An annuity in which you will be the only annuitant who will receive the annuity payments for life. The payments will stop upon your death. If you have selected a guarantee period, then the payment will continue till that period.
  11. Level/Fixed Annuity: An annuity where the income will remain fixed for your lifetime.
  12.  In advance: The type of payment frequency you select in advance. For example, if you select a payment frequency of quarterly in advance, you will receive your payments at the completion of three months.
  13. OMO (Open Market Option): An annuitant’s right to shop around to find the best annuity rate by seeking quotes from multiple annuity providers
  14. Payment Frequency: The frequency at which you receive your payments. Can be monthly, quarterly, half-yearly or yearly.
  15. Postcode Annuity: A specialized type of annuity which is offered on the basis of the area where you live. A postcode annuity is based on the thought that people living in poorer areas may have a shorter life expectancy and people living in a richer locality may have a longer life expectancy.
  16. Purchased Life Annuity: A type of annuity that is not purchased using the money in your pension pot. You can use your pension commencement lump sum or any other funds that you may have saved.

RELATED: Types of Annuities

Factors That Determine Your Annuity Income

As annuity rates dip after the infamous credit crunch, pensioners were left with a bare minimum monthly income despite selling their entire hard-earned pension pot.

Then came the pension overhaul which has changed the way retirees can access their pension pot and use it.

Buying an annuity before the age of 75 is now merely an option that pensioners can choose to ignore. They can instead take the entire amount as a cash lump sum or draw small instalments of money when they wish to.

But as experts recommend, buying an annuity may still be a better choice, because it guarantees retirees with a fixed monthly income for the rest of their lifetime.

With rising life expectancy, a person’s retired life could last well beyond two decades, even three. Will the money last that long if you take it all in one go?

Would you rather blow your entire pension on a Lamborghini or have a fixed monthly income that remains unaffected by the economy or the stock market crash?

How much will you get?

The first question that most savers ask is, ‘How much money will I get every month if I buy an annuity’. The answer is relative.

There are multiple factors, individually dependent, that can influence your annuity income. Here are some of them.

  1. The Type of Annuity: Buying an annuity is a one-time decision that usually cannot be reversed. So, ensure that you know what you are choosing. The type of annuity you choose along with the options you select will impact your monthly retirement income. For example, if you have a dependent spouse or child, you may have to opt for a joint-life annuity which will reduce your monthly income but ensure that the income will be paid to your dependent nominee for the rest of their lifetime.
  2. Annuity Rates: The annuity rate when you buy the annuity is one of the most crucial factors that will influence your income. If the rates are high, you get a higher monthly income. If the rates are low, the income will be lower.
  3. Deposit Amount: More the money you put into an annuity, the higher you get each month. If you have accessed your pension pot and drawn the tax-free cash lump sum amount (25%), then you may be left with a smaller amount to exchange for your annuity.
  4. Payment Terms: How do you wish to be paid? An annuity provider can pay you monthly, quarterly or even yearly. The more you defer the payment, larger the amount you receive.
  5. Age: The younger you are when you buy an annuity, the lesser you will receive. For example, if you buy an annuity at 65, the insurance company will consider your current health and the life expectancy at that time to determine your monthly income. At the same time, if you choose to buy an annuity at 75, your life expectancy reduces. So, the annuity provider has to pay you a fixed monthly income for less number of years. Hence, you may qualify for a higher monthly income than what you would have received if you bought the annuity at the age of 65.
  6. Your Pension pots: The number of pension pots you have accumulated over the years will increase the amount of money you use to purchase an annuity. So, consolidating your pension pots can give you a higher monthly income.
  7. Inflation: Inflation can affect what you can purchase with your fixed monthly income in 10 years from now. So, unless your annuity income increases with time, it could not be enough for you to lead the lifestyle you do currently. A positive sign is that inflation rate in UK reached an all time record low of -0.10 percent in April 2015. But whether the trend will continue or increase; only time can tell.
  8. Tax: Annuity payments are subject to taxation at your usual rate. So, if you have other sources of income, then you must speak to an independent financial expert about your financial circumstances before you invest in annuities.

Identifying a Pension Scam

New pension reforms were introduced on 6th April 2015 which will change the face of retirement income in the UK forever.

It allows citizens better control and flexibility to access their pension pot. But a lot of questions still hang in the air as people are not fully aware of the changes.

Fraudsters see this as a perfect opportunity and time, to strip the hard earned money off gullible retirees.

Pension Scams of multiple varieties are on the rise in the UK.

From an email that pops out of the blue, promising incredibly high returns from ‘creative’ investment options, to a phone call that lures you into believing that you can get access to your pension pot before the age of 55, there are many ways in which a pension shark may approach you.

The only way you can protect your life savings is by being aware and spotting a scam a mile away.

The Modus Operandi

Most pension fraudsters will try to entice you into transferring the funds in your pension pot in exchange for lucrative returns on bogus investments.

You may receive an email, a phone call or a conman may turn up at your doorstep.

The person will look like a legitimate representative of a pension company and will sound extremely convincing.

They may even have a very attractive website that may have the words, ‘Pension’ or ‘Wise’ in their name, to fool people into believing that they are a part of the government Pension Wise service.

You are more likely to be contacted by scammers if you are nearing retirement.

The Common Ones

Over the years, many retirees have been scammed off their hard earned money by scammers who keep coming up with innovative methods.

These are some of the common ones that you may be approached with:

  1. Free Pension Review: This is one of the most commonly used methods by fraudsters. You may be contacted by companies that claim to work on behalf of the government offering you free guidance on investing your pension funds. Typically, retirees are asked to move their funds into self-invested personal pensions (SIPP) with unregulated investment options like forestry, wineries, storage pods, cement factories in Nigeria, properties in overseas destinations like Costa Rica and rainforest harvesting.
  2. Pension Liberation Plan: The only way you can get access to your pension funds before the age of 55 is if you are batting ill health. Fraudsters who offer ‘Pension Loans’ or ‘Pension Liberation Schemes’ hide the fact that you may lose up to 70% of the liberated pension amount as taxes by the HMRC. This will be in addition to up to 30% charges by the fraudsters themselves leaving you with virtually nothing.
  3. Common Names: These are some of the terms that should immediately draw a red flag. One-Off Investment Schemes, Legal Loopholes, Government Endorsements, Overseas Investments and Creative Investments. The general thumb rule is to avoid any investment option that you receive via cold-calls.

Protect Yourself

It is important to know that the government will never contact you or encourage you to make investments in get-rich-quick schemes.

So, if you receive a cold-call from someone who claims to represent or work on behalf of the government and asks for details about your pension pot, do not reveal the information. The best you can do is hang up. Alternatively, you can ask them if you can call them back.

Most fraud companies do not want you to call them back and will refuse.

If they agree and provide you with a phone number, call the Financial Conduct Authority (FCA) on 0800 111 6768 to verify if the person or company calling you is legitimate.

The FCA register has details of all licensed pension providers. Call back the company or person on the number provided in the FCA register and not the one they provided you with.

Do not be rushed into making a decision no matter how lucrative the investment option seems or how urgent they make it appear to be.

Always seek the advice of an independent professional before you agree to transfer your pension pot to any SIPP. 

How to Select a Financial Advisor

There is such an abundance of information about pensions and retirement online that retirees can make the mistake of trying to cut corners and making crucial financial decisions themselves.

If one thinks closely about the implications that such a decision may have in the next few years, the thought can be scary.

One small mistake while buying an annuity or while choosing an investment fund, can virtually change the way your life unfolds in the twilight years.

SEE ALSO: What is an Annuity?

All those years of planning, saving, and preparation can be undone in minutes.

That’s why most financial experts and even the government encourage you to seek independent financial advice before you make decisions about your pension.

It is not very expensive, and the information and advice you receive can be very well worth it. In fact, you should consider it as an investment in its own right.

How to find financial advisors

One of the easiest ways to find a financial advisor is to ask for recommendations from your colleagues or friends who may have hired their services.

However, the catch is that it may not always be possible to gauge the quality of the advice provided that a few years pass.

There are other public resources which can be a valuable source of impartial information about Independent Financial advisers who are regulated by the Financial Conduct Authority (FCA). Here are some of them.

  1. The Unbiased Web Directory (www.unbiased.co.uk) lets you search for a financial advisor close to you by entering your postcode
  2. Vouched (VouchedFor.co.uk) is a review based website that provides ratings and reviews written by genuine clients of various financial advisors. It is a good resource to analyze the services of financial advisors.
  3. The FCA (The Financial Conduct Authority) register allows you to check and know if a financial adviser you selected is an authorized one

What should you look for

Financial advisors come in all shapes and sizes and have varied areas of expertise.

Since you are looking for advice regarding retirement income, pensions, and annuities, you should look for an adviser who is skilled and qualified in those areas.

  • Check if they are qualified. Although all Independent Financial Advisers are required to be qualified to a certain minimum level (Ofqual accredited level 4 qualification), any additional qualifications will be a plus.
  • Check their expertise. A financial adviser who has been around for the last few years will certainly be a better choice than someone who has recently started their practice.
  • Ask for references to see if their clientele has mostly been people who had similar requirements as yours. A diverse clientele does not necessarily mean that they cannot provide you with good advice.
  • Check the fees beforehand. As per the RDR – Retail Distribution Review dated 31st Dec 2012, you can choose to pay fees upfront for the services, or you can choose to pay them a commission from the amount you invest in a product that they recommend. But do not slump for the first quote you receive. Get quotes from multiple financial advisors.
  • Ask if they are an independent adviser who will be able to provide you with impartial advice and offer a broad range of investment options. If the adviser only offers a limited number of investment options, then they may be a ‘restricted’ advisor.
  • Ask if you will be provided on-going advice if necessary and what it will cost you.
  • Look for advisers who agree to meet you face-to-face, free of charge. Usually, a direct meeting is a better way to understand if you are dealing with the right person.

The Preparation

If you have selected a financial adviser, then the next step is to ensure that you prepare well for the meeting. They will first try to get a clear picture of your investments and if applicable, that of your partner or spouse.

So prepare a list of all relevant details like your assets, liabilities, existing policies, private pension plans, investments, power of attorneys, wills, employment pension schemes, payslips, national insurance number and any other information which you think may be relevant.

You may also look at our Complete Pensions FAQ.

Where to Find the Best Paying Charity Accounts

If you are looking at charity savings accounts, you may not be too excited by the interest rates that they currently offer.

As a result, the hard-won funds of your charity may only be earning an inadequate amount of money… but it does not have to be that way!

While well-known banks and building societies do not tend to give the best rates on the market, there are other providers that you can choose from. As a trustee, you will need to be prepared to shop around to discover the best charity savings rates.

If you take the time to look, there are a number of higher-paying accounts that are available to charities, with the majority being granted by providers that are smaller and lesser-known.

The best rates on charity deposit accounts will be given when your organisation:

  • Can commit to not having near-term or immediate access to its funds. Fixed rate and notice accounts offer higher rates than accounts allowing easy access.
  • Consider Business Deposit Accounts as an alternative
  • Has a sizeable amount of money to save. For example, charities with £50K to invest will presumably secure better interest rates than those with more modest amounts to invest.

See:  The Basics of Business Deposit Accounts

What is a Standing Order?

A standing order is a method of establishing a regular, fixed payment from your bank account.

You can schedule a payment to be taken at a determined regularity (for example, the 3rd of every month) and for a set amount of time, such as three months. Your payments will consist of money that is set at an amount that was chosen by you.

You can usually set up a standing order by accomplishing a standing order form and submitting it to your bank or arranging the standing order over the phone, in the branch, or by using online banking.

What is the difference between a standing order and a direct debit?

A standing order is basically an instruction to your bank, whereas a direct debit, on the other hand, allows a company to take money from you. You are the solely the only person who can change the payment amount or the date on your standing order. This is the principal difference to a direct debit, where these circumstances can be changed by the organisation or the person that you are paying.

What if I do not have enough in my bank account to pay for a standing order?

If there is not enough money in your account to pay for a standing order, you may be allowed to take advantage of a buffer zone, if your current account includes one. This is essentially a small interest-free overdraft that your bank would not charge you for if you sneak into it.

Your bank or building society may refuse to pay for the standing order if you exceed the buffer zone. They may also charge you a fee. You may also be asked to pay for additional charges if paying for a standing order pushes you into an unauthorised overdraft.

If you already know beforehand that you would not have enough money in your bank account, the safest thing to do is to arrange an overdraft that is temporary with your bank in order to pay for the standing order. Alternatively, you could attempt to negotiate a later payment date with the person in question.

If you regularly miss standing orders, you should consider paying by a different method or changing payment dates.

How long will it take for a standing order to reach the recipient?

The Faster Payments service can be used to make standing orders which means that the payment can be received on the same day, or the next working day if the payment is made on a bank holiday or a weekend. If your bank does not make use of Faster Payments, it may take three working days for a standing order payment to transfer from one bank account to another.

How do I cancel a standing order?

You are the only person that can opt to cancel a standing order. You can cancel a standing order at any point in the branch, via secure online banking, or over the phone or. You will have to make sure that you inform the person or organisation that is due to receive the payment before you do, as you could incur penalties or fees for non-payment. Remember that if you do not pay a bill on time, this could also have an effect on your credit rating and appear on your credit file.

A Guide on Savings Accounts

Savings accounts come in various forms. However, they all aim to build up a lump sum of money that you can use for whatever purpose that you like.

You may be saving for to build up an emergency fund or for a specific purpose, or just for a rainy day.

Savings accounts normally come in the form of deposit accounts, which lets you earn interest on the money that is held in the account. Providers will then use that money to lend to other customers in the form of mortgages, loans, and credit cards.

Most people perceive savings as regularly putting a little money away to build up a large pot of money. However, there are some savings accounts that allow lump sum amounts and intend to increase the value of them.

Different types of savings plans

There are a lot of shapes and sizes of savings plans such as:

  • Cash ISAs allow you to grow your savings tax-free.
  • Internet savings accounts are specifically run over the internet. Interest may be slightly higher since the accounts are cheaper to run.
  • Instant access savings accounts allow you to have immediate access to your money without any penalty.
  • Notice savings accounts require you to issue a notice of withdrawal. You will be penalised by a loss of interest if you cannot provide the notice period that you need to, and in some cases, you would not be permitted to have access your money early at all.
  • Children’s savings accounts or specialist over-50’s savings accounts may have several features that you (or your kids) will be able to benefit from.
  • Savings plans can be on a fixed interest rate or variable interest basis.
  • Offshore savings accounts allow you to receive interest gross or even defer it to manage your tax liabilities.

How savings providers make their money

National Savings Accounts that backed by the UK Government include a number of tax-friendly accounts for children and adult.

There are no charges to set up a deposit savings accounts and normally no fees either. Providers make their money by making use of your savings to lend to other customers at a rate that is higher.

You may be penalised for early withdrawals on a notice account, which saves the provider from paying a certain amount of interest, thereby increasing their return.

Taxation

From April 6, 2016, people who earn under £150,000 will receive a Personal Savings Allowance, which means that the first portion of interest that is earned in a tax year is tax-free. If you are a basic rate taxpayer, this amount is £1,000, and if you are a higher rate taxpayer, it is £500 (taxpayers with highest rates do not receive an allowance).

However, you must be careful as this does not just apply to normal savings accounts. If you earn interest on investments, such as Government gilts or corporate bonds, or if you receive an income from any fixed interest investment funds that are classified as ‘interest dividends,’ then they will also be included in your £1,000.

This allowance does not apply to some National Savings & Investments products and cash ISAs, as these are already tax-free anyway.

If you earn some money over your allowance amount, you will be required to declare your interest to the HMRC and pay any tax that is due.

Read also: Can You Still Receive a Decent Return on Your Savings?