Episode 434 - On this week's episode Lauren and I discuss the best Money Dashboard alternatives and I reveal my personal top pick. I then delve into the latest innovation in the mortgage sector, highlighting a new fixed-rate mortgage product with an interest rate that is 2% lower than the current best-buys. I also go on to discuss the importance of taking account of a lender's mortgage product fee. Lastly, inspired by a question from our Instagram community, I discuss how children's savings accounts are taxed and why a lot of people will now fall foul of a little-known tax trap.
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Money Dashboard alternatives
In the section of the podcast we looked at the alternative options to the soon-to-be-closed app, Money Dashboard. Lauren and Damien discuss the three primary alternative apps namely Emma, Snoop, and Money Hub. Below you can find sone of the discussion highlights surrounding each app as well as a link to our full review of each one.
- Competed directly with Money Dashboard due to its free budgeting features.
- Now restricts many free features, prompting users to subscribe.
- Subscription ranges from £4.99 to £14.99/month, though discounts are frequently available.
- The free version allows you to only connect two bank accounts.
- Emma provides an ingenious "rent reporting" feature for credit reference agencies.
- Offers a savings goal feature.
- Alerts users when regular payments or direct debits increase.
Read our full Emma app review
- Originally focused on saving users money on bills.
- Has enhanced its budgeting features over time.
- Offers a free plan and a "Snoop Plus" plan at £4.99/month.
- To get unlimited custom categories and payday-to-payday tracking, users need the paid plan.
Read our full Snoop review
- Often seen as the closest alternative to Money Dashboard.
- Subscription fee of £1.49/month or £14.99/year, with a six-month free trial.
- Doesn't automatically renew after the trial, putting faith in their product.
- Offers features such as forecasting for long-term planning.
- Feels complex initially but can be customised to individual preferences.
Read our full Moneyhub review
Damien then went on to explain his personal choice for the best alternative to money dashboard, which you can hear by listening to the podcast using the player above.
Other Budgeting Options
For those not keen on connecting bank accounts to apps, other solutions, such as bank-specific offerings, are discussed. These include Starling and Monzo. We also discuss the benefits of the Money to the Masses free budgeting spreadsheet.
Mortgage lender fees and why they are important
In this part of the podcast we discuss Skipton's new market-leading 3.35% 2-year fixed-rate mortgage deal with particular attention paid to the lender fee of 5% of the mortgage value. Damien then discusses the importance of factoring in the impact of lenders' fees when taking out any mortgage and explains how to do it.
Child savings tax trap
In this part the podcast we discuss the little-known tax trap affecting parents whose children have savings accounts. The piece on the podcast was inspired by the following listener question on Instagram:
"Hi Damien, love your instagram and Spotify podcasts! I have a question for you if you don’t mind? I have opened a Halifax kids saver account at 5.5% interest for the first year. My question is, am I better off putting that money into my ISA account so it’s shielded from tax? I understand that I only get £500 interest fee a year in savings as I am a higher rate tax payer? Thank you!!"
One option is to transfer to another children's savings accounts with a competitive rate. We provide a weekly updated list of the Best children's savings accounts. We then go on to explain the taxation of children's savings account interest including the options open to parents (like the listener) trying to mitigate tax. A summary is given in the next section.
Potential child savings tax trap
If a child earns £100 or more in interest on their savings (from money gifted by a parent), it's taxed as if it's the parent's income. All the interest, not just the amount over £100, is counted as the parent's income, which could be heavily taxed depending on their personal savings allowance and remaining income tax allowance. With 5% interest now readily available on children's savings accounts, having a total of just £2,000 in savings would produce £100 interest in a tax year.
- Use an ISA to shield any interest from taxation as the listener suggested but that will utilise your own ISA allowance.
- Alternatively if the money was placed in a Junior ISA (you contribute up to £9,000 each tax year). However, bear in mind that the child will have full access to the money at age 18.
- Have family and friends gift money for the child instead, as any money they gift is always taxed as the child's. However, careful records need to be maintained to separate parents'. contributions from others. Children have their own personal and savings allowances, which could be then be utilised.
- Gifts from both parents can be made equally from joint or individual accounts, providing a way to potentially double the threshold before the tax implication hits.
- If one parent has an unused personal income tax allowance each tax year it makes sense for any payments into the child's savings account to come from them. That's because even if the child earns over £100 interest in a tax year there would be no income tax due from the parent as the the interest payment would utilise some of the parent's tax-free allowances.
- Also don't forget about the starting rate for savers , offering an additional £5,000 on top of the income tax personal allowance.
Links referred to in the podcast:
- Money Dashboard to close all accounts on 31st October 2023
- Moneyhub review
- Snoop review
- Emma app review
- The Money to the Masses Budget planner
- Starling Bank increases its current account interest rate
- Skipton announces market-leading 3.35% 2-year fixed-rate mortgage deal
- Money to the Masses Mortgage best buy tables
- Speak to a mortgage adviser
- 35 year mortgages on the rise
- Amortization mortgage calculator
- MTTM Mortgage payment calculator
- MTTM - Ep 392 - Offset mortgages