Banking

‘Take a look’ warning issued to anybody with bank account over £172 bonus


Cash ISAs are back in fashion as rates rise to five per cent – and higher – amid the Cost of Living crisis. Anna Bowes, a co-founder of the website Savings Champion, says it is definitely time to consider one.

“Isas are a good idea for those who can no longer avoid paying tax on their savings, even though in many cases the rate would appear to be less on the Isa than the equivalent taxable account,” she said. Bowes says you should also “take a look at what you would earn after tax on a standard account, compared with the tax-free interest on an Isa”.




Rachel Springall, a finance expert at the financial data provider Moneyfacts, says: “Navigating the best rates is essential for any investor considering a cash Isa as providers continue to adjust their rates.” A cash ISA is just a savings account where you’ll never pay tax on the interest – and in the 2023/24 tax year, you can put up to £20,000 into one if you’re 16 or over.

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Figures from HM Revenue and Customs show that 12.2m were paid into in 2008-09 – but the number had fallen to just over 7m in 2021-22. Bowes goes on to highlight why many should be picking cash ISAs over standard savings account, with one account paying 6.05 per cent for a year.

After the deduction of 20 per cent tax, this account would be 4.84 per cent net, while one of the best one-year cash Isas, from UBL UK, was at the time of writing paying 5.7 per cent%. “On £20,000, that’s a gain of £172,” Bowes told the Guardian. Money Saving Expert, founded by Martin Lewis, has found the best cash ISAs could be Harpenden Building Society at 5.1 per cent, as well as Zopa and Cynergy at 5.08 per cent and 5.07 per cent respectively.

Virgin Money has a 5.01 per cent one going, too, with a maximum three penalty-free withdrawals per calendar year.



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