So you by declaring the dividends as interest you are paying tax at the higher income tax vs dividend tax rates ie just how a non-reporting fund should be treated.
We pay no tax on interest since my wife’s tax-free interest allowance is £1,000/year (basic rate taxpayer) and my allowance is £500 (higher rate taxpayer). That sweep account earns very little interest as I always either reinvest or move it to the UK.
For our emergency funds in the UK we each own the maximum amount of premium bonds which is £50k each and the interest from that is tax free. When major expenses come up it only takes a business day or 2 to move money out, then I top it back up later (It’s all done online these days). So far we are on schedule to earn at least 3% this year unless we get a big win in November or December. If we win nothing then it will be about a 3% return, but we rarely win nothing each month. There is an NS&I app that we use which lists the winning bonds and amounts in order of amounts that is fun to use. This month my wife had 4 winning bonds, 25, 25, 100, 100 and I had 2 winners of 100 each. One year I got 25, 25 then 1,000 which is the highest single month winner I have had.
There is a great statistician called David Spiegelhalter that is often on the BBC podcast “More or Less” when discussing figures, probabilities and statistics and I recently learned that he holds the maximum amount of Premium Bonds as well. If you have average luck you will get the implied interest rate on your winnings, but you just might land a really big prize, so it was good to hear that a renowned Fellow of Cambridge in statistics likes the odds and simple thrill of it all. The capital is backed by the UK government so you are only gambling a bit of interest.
https://en.wikipedia.org/wiki/David_Spiegelhalter
