Best UK savings options?

[RingoFan]

Hello everyone,

I have a bulk of my UK savings in an HSBC "Online Bonus Saver" account. However, in July 2023 I transferred a sizeable amount to a Skipton International fixed rate bond (18 months) which matured earlier this month.

Skipton International have similar 1 and 2-year fixed rate bond products available, so I am considering purchasing one again later this month. The rates are lower than 18 months ago, however it seems likely that the BoE will continue to cut interest rates, so I believe any fixed rate bond I purchased from Skipton International now will likely provide a better return on my UK savings that simply leaving it in the HSBC savings account. I should perhaps add that I do not have any immediate use for these GBP funds, so am happy to lock them away for a year or two.

Any thoughts?

Do any other Brits have any suggestions for how to save (or invest?) a lump sum, in order to earn a reasonable return with no risk? Does anyone have any experience using UK-based platforms such as Hargreaves Landsdown or Investengine to purchase UK gilts/bonds directly?

Cheers,
James
x

[Deep Blue]

I have sterling in both UK fixed rate bonds (mostly maturity of 2 years) with Lloyds, several of which mature this year. Rates between 4 to 5.55%

Just checked and current rates are 4% for a one year fix and 3.85% for two.

I also invest in gilts, but not directly - instead I have money in gilt tracker funds. This is one of them

https://www.bestinvest.co.uk/v2/factshe ... -index-gbp

[Beaglehound]

I imagine your Skipton bond rates will be competitive against any other options for risk free returns. It isn't easy these days to open new UK accounts as you likely know. Even if you have a legacy account (as I do with Nationwide) they will not allow you to open new accounts generally (Lloyds would seem to be an exception as per Deep Blue's post).

As an aside, how easy or otherwise was it to open your Skipton international account?

[Wales4rugbyWC23]

Is this Skipton offshore building society account?

I tried to open a savings account when I was back in the UK and all them wanted me to be a resident.

Does know what the situation is with National savings bonds?

[Beaglehound]

Is this Skipton offshore building society account?

I tried to open a savings account when I was back in the UK and all them wanted me to be a resident.

Does know what the situation is with National savings bonds?

National Savings is doable but enough of a faff (certified documents etc) that when I looked into it a year or so ago I lacked the motivation to follow through. My legacy Nationwide account still pays 3.5%, were that to disappear or decrease my motivation to jump through hoops would increase I suspect.

[RingoFan]

I have sterling in both UK fixed rate bonds (mostly maturity of 2 years) with Lloyds, several of which mature this year. Rates between 4 to 5.55%

Just checked and current rates are 4% for a one year fix and 3.85% for two.

5.55% is great!
I was pretty happy to secure 18 months at 5.25% with Skipton International. Currently their return for 12 moths is 4.3% for 50k, rising to 4.6% for 100k:
https://www.skiptoninternational.com/of ... -accounts/

I did actually try opening a fixed rate bond with HSBC UK, who offered reasonable rates at that time. However, it was not available for me to open online, so I tried calling them, spent an age on the phone (skype) being passed around different departments. Eventually, it was concluded that I was not eligible to start the bond, most likely because I resided outside of the UK. So I went with Skipton International.

I also invest in gilts, but not directly - instead I have money in gilt tracker funds. This is one of them
https://www.bestinvest.co.uk/v2/factshe ... -index-gbp

Ah, I see. Is that terribly reliable though? As a tracker fund, surely the yield will fluctuate, whereas my understanding is that if you buy the bond yourself, you lock-in the return (provided you hold it to maturity).

I expect you may be familiar with the PensionCraft YT channel, however the chap on there recently had a good video about bonds/gilts, which is what piqued my interest:

https://www.youtube.com/watch?v=yAs5Mro9NlQ

Cheers,
James
x

[RingoFan]

I imagine your Skipton bond rates will be competitive against any other options for risk free returns. It isn't easy these days to open new UK accounts as you likely know. Even if you have a legacy account (as I do with Nationwide) they will not allow you to open new accounts generally (Lloyds would seem to be an exception as per Deep Blue's post).

Yes, I expect your right. I occasionally check the money/savings comparison sites, just in case there is a better deal that I may be missing out on, however those are typically only available to UK residents. For expats wishing to save their GBP, it's pretty slim pickings, it seems. This site does a good job of pulling data in from the main providers:
https://moneyfactscompare.co.uk/savings ... s-accounts

As an aside, how easy or otherwise was it to open your Skipton international account?

It was pretty straight forward. The application had to be completed as a PDF form and emailed to them, along with the usual supporting documentation. I recall the hardest part was obtaining proof of address from a utility bill, as I disposed of my monthly gas bill shortly after signing-up and had to wait for another, and then provide the English translation etc. After that, they requested an online interview to confirm a few more points. Once that was completed, the account was created in a few days, and I transfer funds. Their customer support are pretty efficient and respond to enquiries within 24 hours or so. Really, no complaints. Assuming I don't receive any more attractive options for holding my money, I will likely purchase another 1 or 2-year bond with them again shortly.

Cheers,
James
x

[RingoFan]

Is this Skipton offshore building society account?

I tried to open a savings account when I was back in the UK and all them wanted me to be a resident.

My understanding is that Skipton International is a subsidiary of Skipton Building Society that operates in the offshore banking market (they're based in Guernsey) and cater to expats.

Cheers,
James
x

[Deep Blue]

Ah, I see. Is that terribly reliable though? As a tracker fund, surely the yield will fluctuate, whereas my understanding is that if you buy the bond yourself, you lock-in the return (provided you hold it to maturity).

I expect you may be familiar with the PensionCraft YT channel, however the chap on there recently had a good video about bonds/gilts, which is what piqued my interest:

https://www.youtube.com/watch?v=yAs5Mro9NlQ

Cheers,
James

It is a good question - there are various types of risks. When I buy a tracker fund, I am also locking in the yield to maturity at the time of purchase, which is exactly what I want to do and the same as you would with a direct gilt purchase. But for me, this might well be different to the actual yield the fund provider decides to pay out. However, economically there is no difference to retaining the coupons in the fund (increasing the NAV) and paying them out. The money is still there and owned by the unit holder - either via dividend and increased NAV.

Where the fund is different to buying gilts directly is that there is reinvestment risk - when they use the proceeds of the maturing gilt to buy the next gilt in the series/index. If you own the gilts directly you control this decision, whereas I don't.

For me, there is one huge advantage of buying a tracker fund - more advantageous tax treatment. I pick the accumulation units (not the income units) which means all income is reinvested in the fund without coming to me first. So, I don't have to pay Japanese tax on this each year.

Of course, there will be a capital gains tax liability when I come to sell this, but I have plans to deal with this too.

[northSaver]

I have sterling in both UK fixed rate bonds (mostly maturity of 2 years) with Lloyds, several of which mature this year. Rates between 4 to 5.55%

I have a quick question about UK fixed term deposits. If the term is greater than one year, when do you file the interest income on your Japanese tax return? Do you file it when you receive it (e.g. annually) even though the policy has not yet matured? Or do you wait until the policy has matured, e.g. after two years? I've only held one-year FTDs until now. Thanks

Regarding gilts, I buy ETF VGOV on Interactive Brokers. Not ideal but it's served me well over the years.