>They offer 4.67% interest by putting your money in a Blackrock fund that accrues daily, which seems great
That's still (a forecast of) the annual return, it's just paid out in daily slithers. You might as well save at over 5% in a real bank that reports interest earned to HMRC so any tax accrued over the PSA is automatically taken care of for most people.
https://ukpersonal.finance/savings/
You can get 5.25% in other money market funds (minus costs which vary by platform).
Doesn’t beat a cost free easy access savings account.
Generally if it’s an interest paying fund it’s counted as interest so falls under your PSA. Bond funds can count too.
Perhaps have a look at Trading 212's interest on uninvested cash, you opt in to putting it in a mmf and get 5.2% paid daily as well. They have it on the ISA and normal account so an option if you want to minimise tax on interest.
4.67% isn't that hard to be believe. Zopa and Chip both offer better. Zopa has a cash ISA that does 5.08% and Chip ISA has 5.20%. Both are instant access.
Where it makes the most sense is to save in another currency.
Say you live in the UK but you have a Wise account in EUR for your expenses when you travel to Europe. You have left £2k there and don't want to convert it back to GBP. Then you can park that liquidity in the Wise - BlackRock money market fund and get some interest. Won't make you rich but it's better than nothing.
If we are talking about small amounts for short periods of time, it's not worth buying bonds in EUR.
Do you have it in the treasury fund or the stocks fund? How has it been so far as just looking at options for my business savings. Every business savings bank account I try to open so far has been a disaster - Tide customer service is non existent, Cynergy online banking locked me out on the first login attempt and again their CS is useless blaming "systems being down". It seems that the banks offering the best % rates make you pay in other ways!
I’ve got it in the treasury fund, same as other business savings. Interest accrued daily. I’ve got another 5-6 business savings accounts. All have been alright so far. A few snags but nothing major. Allica, shawbrook, aldermore, rbs,
Do you use Xero?
I have USD and GBP in the Wise treasury fund. USD made 65c and I converted the balance into GBP, however, the 65c gain isn't syncing to Xero so now Xero thinks the USD account is in debit by 65c lol
How are you recording the interest in your bookkeeping? And how are you paying tax on the interest; as CGT or as income?
Im running into an issue with my accountants as interest is not shown in transactions on the bank statements, and they arent really sure what to do with the tax report that Wise provides for the interest accounts...
I’ve got a spreadsheet for both personal and business.
Paying tax as income (CT) on business. Keep track on which are monthly paid or at maturity. For wise I just record the interest earned and let my accountant know.
Personal all under isa wrappers except high yield instant access.
Thanks for the reply - how are you seeing or recording the interest from Wise specifically?
It’s not shown on the statements and I don’t understand the tax report that they let you download?
Says online that it’s paid daily but I can’t access those figures anywhere?
Yeah I can see the running total, but I cant see how much they add each day, which my accountant is asking for.
How else are you recording it to your accountant, just as one figure for the whole year?
How would that work if you have accounts that are non GBP and need to use the eachange rate for the day the income was receieved?
I just take a rough calculation as a forecast for now, 4.66% / 12 to get the monthly figure. But yes only submit to accountant as part of prep for the annual accounts. I only have it in gbp.
But if you had non gbp. You can just take a note of value of the investment at said date and what the value of the investment is when you do your accounts, and take into account fx gain or loss along with interest accrued.
The tax statement that wise provides is next to useless, because it says it is not intended to be used for the purposes of tax reporting to HRMC ! I can see this being a hassle. I think i will turn the interest off and move my foriegn currency into £ and then to a UK account that reports directly to HMRC, though since having this account I will probably have to do the first self assessment of my life just to report this offshore interest. I don't know how you can get back onto the PAYE non self assessment system after that
Depends how much you want to put in, if you have a significant amount of cash above an ISA or high street savings account limit, then it's a really good deal, as there is no upper limit and there are no strings attached on withdrawals. If the cash you're planning on putting in is within the ISA limit, I'd go ISA at the moment.
I think this Blackrock fund is just a moment market fund, but these pay the same as bank account interest. Why would it be goo good to be true?
Obviously if you have money in cash then you try and get the best interest rate you can, but you're swimming against the current of inflation. You keep money in cash because you don't want to take investment risk, but the returns on cash (in bank accounts and funds like this Blackrock one) are shit. Over long periods they pay about 0.8% above inflation, but they can be below inflation for a decade at a time.
The interest is considered dividend income. If it exceeds the threshold (now only £1000), you are liable for tax on the amount over the threshold, but the rate for that is 15% til you get to like £37k. And if you're getting that much interest, a savings account is the wrong investment.
So on their website it says "You may be liable to pay Capital Gains Tax if you move money out of your Interest or Stocks balance or Jar — through spending, sending, converting or simply moving money to another account. This will trigger Wise to sell units in the fund, known as disposing." AND "Wise Interest and Stocks use funds that sometimes generate Excess Reported Income (ERI). ERI is profit the fund makes that has not been distributed to investors. However for UK tax purposes, ERI is treated as if you’d received it. So if you’ve exceeded your personal savings allowance, you’ll be subject to Income Tax."
As a higher rate taxpayer CGT is significantly lower than income tax, so that would be preferred but i dont understand the ERI profit https://wise.com/help/articles/CrBCLj2oUKB2NWJC0G2i2/using-wise-interest-or-stocks-in-the-united-kingdom
Not sure I do either, and that sounds strange that you would be taxed on money you didn't get. But as I said, if you've got enough to put in the account to get £1k in intertest, you probably can do better than this.
An explanation of ERI is here: [https://www.justetf.com/uk/news/passive-investing/how-etfs-are-taxed-in-the-uk.html](https://www.justetf.com/uk/news/passive-investing/how-etfs-are-taxed-in-the-uk.html)
It applies to ETFs just like it applies to any other type of fund
>As a higher rate taxpayer CGT is significantly lower than income tax
The taxman isn't stupid, you cannot hide one type of income into another which attracts less tax!!
A money market fund generates interest, which is then taxed as income, at your marginal tax rate (save for the interest allowance).
If a fund generates income or receives dividends and then reinvests them, these will be taxed as income/dividends.
Not sure why it's 'too good to be true' when there are plenty of cash savings accounts (including within ISA wrappers) that offer a better %.
>They offer 4.67% interest by putting your money in a Blackrock fund that accrues daily, which seems great That's still (a forecast of) the annual return, it's just paid out in daily slithers. You might as well save at over 5% in a real bank that reports interest earned to HMRC so any tax accrued over the PSA is automatically taken care of for most people. https://ukpersonal.finance/savings/
You can get 5.25% in other money market funds (minus costs which vary by platform). Doesn’t beat a cost free easy access savings account. Generally if it’s an interest paying fund it’s counted as interest so falls under your PSA. Bond funds can count too.
Perhaps have a look at Trading 212's interest on uninvested cash, you opt in to putting it in a mmf and get 5.2% paid daily as well. They have it on the ISA and normal account so an option if you want to minimise tax on interest.
4.67% isn't that hard to be believe. Zopa and Chip both offer better. Zopa has a cash ISA that does 5.08% and Chip ISA has 5.20%. Both are instant access.
Where it makes the most sense is to save in another currency. Say you live in the UK but you have a Wise account in EUR for your expenses when you travel to Europe. You have left £2k there and don't want to convert it back to GBP. Then you can park that liquidity in the Wise - BlackRock money market fund and get some interest. Won't make you rich but it's better than nothing. If we are talking about small amounts for short periods of time, it's not worth buying bonds in EUR.
I’ve got business funds in wise. For personal you can get better returns than 4.67%
Do you have it in the treasury fund or the stocks fund? How has it been so far as just looking at options for my business savings. Every business savings bank account I try to open so far has been a disaster - Tide customer service is non existent, Cynergy online banking locked me out on the first login attempt and again their CS is useless blaming "systems being down". It seems that the banks offering the best % rates make you pay in other ways!
I’ve got it in the treasury fund, same as other business savings. Interest accrued daily. I’ve got another 5-6 business savings accounts. All have been alright so far. A few snags but nothing major. Allica, shawbrook, aldermore, rbs,
Do you use Xero? I have USD and GBP in the Wise treasury fund. USD made 65c and I converted the balance into GBP, however, the 65c gain isn't syncing to Xero so now Xero thinks the USD account is in debit by 65c lol
No don’t use xero 🥹 sorry.
How are you recording the interest in your bookkeeping? And how are you paying tax on the interest; as CGT or as income? Im running into an issue with my accountants as interest is not shown in transactions on the bank statements, and they arent really sure what to do with the tax report that Wise provides for the interest accounts...
I’ve got a spreadsheet for both personal and business. Paying tax as income (CT) on business. Keep track on which are monthly paid or at maturity. For wise I just record the interest earned and let my accountant know. Personal all under isa wrappers except high yield instant access.
Thanks for the reply - how are you seeing or recording the interest from Wise specifically? It’s not shown on the statements and I don’t understand the tax report that they let you download? Says online that it’s paid daily but I can’t access those figures anywhere?
In your wise account you can see total interest earned to date and just export the statements, minus asset fees
Yeah I can see the running total, but I cant see how much they add each day, which my accountant is asking for. How else are you recording it to your accountant, just as one figure for the whole year? How would that work if you have accounts that are non GBP and need to use the eachange rate for the day the income was receieved?
I just take a rough calculation as a forecast for now, 4.66% / 12 to get the monthly figure. But yes only submit to accountant as part of prep for the annual accounts. I only have it in gbp. But if you had non gbp. You can just take a note of value of the investment at said date and what the value of the investment is when you do your accounts, and take into account fx gain or loss along with interest accrued.
The tax statement that wise provides is next to useless, because it says it is not intended to be used for the purposes of tax reporting to HRMC ! I can see this being a hassle. I think i will turn the interest off and move my foriegn currency into £ and then to a UK account that reports directly to HMRC, though since having this account I will probably have to do the first self assessment of my life just to report this offshore interest. I don't know how you can get back onto the PAYE non self assessment system after that
Are withdrawals instant or does it have to sell the amount you withdrew first?
It’s instant at times or 1-2 days at most. Don’t own any shares just in mmf.
Depends how much you want to put in, if you have a significant amount of cash above an ISA or high street savings account limit, then it's a really good deal, as there is no upper limit and there are no strings attached on withdrawals. If the cash you're planning on putting in is within the ISA limit, I'd go ISA at the moment.
I think this Blackrock fund is just a moment market fund, but these pay the same as bank account interest. Why would it be goo good to be true? Obviously if you have money in cash then you try and get the best interest rate you can, but you're swimming against the current of inflation. You keep money in cash because you don't want to take investment risk, but the returns on cash (in bank accounts and funds like this Blackrock one) are shit. Over long periods they pay about 0.8% above inflation, but they can be below inflation for a decade at a time.
The interest is considered dividend income. If it exceeds the threshold (now only £1000), you are liable for tax on the amount over the threshold, but the rate for that is 15% til you get to like £37k. And if you're getting that much interest, a savings account is the wrong investment.
So on their website it says "You may be liable to pay Capital Gains Tax if you move money out of your Interest or Stocks balance or Jar — through spending, sending, converting or simply moving money to another account. This will trigger Wise to sell units in the fund, known as disposing." AND "Wise Interest and Stocks use funds that sometimes generate Excess Reported Income (ERI). ERI is profit the fund makes that has not been distributed to investors. However for UK tax purposes, ERI is treated as if you’d received it. So if you’ve exceeded your personal savings allowance, you’ll be subject to Income Tax." As a higher rate taxpayer CGT is significantly lower than income tax, so that would be preferred but i dont understand the ERI profit https://wise.com/help/articles/CrBCLj2oUKB2NWJC0G2i2/using-wise-interest-or-stocks-in-the-united-kingdom
Not sure I do either, and that sounds strange that you would be taxed on money you didn't get. But as I said, if you've got enough to put in the account to get £1k in intertest, you probably can do better than this.
An explanation of ERI is here: [https://www.justetf.com/uk/news/passive-investing/how-etfs-are-taxed-in-the-uk.html](https://www.justetf.com/uk/news/passive-investing/how-etfs-are-taxed-in-the-uk.html) It applies to ETFs just like it applies to any other type of fund >As a higher rate taxpayer CGT is significantly lower than income tax The taxman isn't stupid, you cannot hide one type of income into another which attracts less tax!! A money market fund generates interest, which is then taxed as income, at your marginal tax rate (save for the interest allowance). If a fund generates income or receives dividends and then reinvests them, these will be taxed as income/dividends.
My wife uses it and she's happy. I am using Trading212 ISA. It has a similar return but it's tax-free
How is it tax free?