With less than a month to go until the April 5th ISA deadline, savers need to get their skates on.
There’s now less than a month to go before the April 5th deadline and time is ticking by until this years’ ISA allowance slips into obscurity. So, if you haven’t already invested any spare cash you have in a tax efficient savings account, now is the time to do it.
If you shop around there are some really great returns to be had as while we’ve been paying for rising interest rates elsewhere, the world of savings has been looking up and with today’s decision by the Bank of England’s Monetary Policy Committee to hold interest rates at 5.25%, things should remain stable for a little longer.
Front runners include the Barclays Tax Haven ISA, offering an impressive 6.5% (although is only available to Barclays customers) the Icesave Easy Access ISA at 6.10% and the Egg cash ISA at 6.05%.
However, despite the attractive interest rates and obvious tax free advantages, many of us are still not taking advantage of ISAs as a means of protecting our hard earned cash from the tax-man's glare. In fact, only 1/3 of Britons hold an ISA account despite many more paying into taxable savings and investments.
Nationwide, the UK’s second largest ISA provider, estimates that we’ll have paid the taxman in excess of £225million unnecessarily this year simply by not making the most of our ISA allowances.
Matthew Carter, Savings director for Nationwide, commented: "With only a month remaining in the current tax year, people should make sure they are taking advantage of the tax-efficient savings on offer by using all of this year’s ISA allowance. Any part of their allowance remaining unused by 5 April will be lost forever. Millions of people fail to do this each year and are simply allowing their hard-earned money to line the Chancellor’s coffers."
Under the current ISA scheme savers can invest up to £3,000 as cash and up to £7,000 as stocks and shares completely free from tax. After 6th April, these tax exemption limits will increase to allow £3,600 to be invested as cash and up to £7,200 as stocks and shares.
(In the 2009 budget the Chancellor announced that the ISA limit is set to increase to a total tax free savings allowance of £10,200, £5,100 of which can be saved as cash. This is set to come into effect later in 2009 for those over 50 and next year for all other savers).
Other changes to the system include the rather confusing Mini/Maxi ISA distinction being scrapped in favour of a more flexible scheme that allows cash ISAs to be transferred to stocks and shares without losing their tax-free status and Child Trust Funds and PEPs being enveloped under the tax-free ISA umbrella on maturity.
As the government have announced that ISAs are set to be a permanent fixture on the savings landscape it pays to get on board now so that you can continue to reap the returns on your tax free investments for many years to come.
We have done our very best to make sure that the information included in this Deal is accurate. However, sometimes offers can be withdrawn or changed at the last minute so please do check that you're able to redeem this Deal before parting with any money, or going out of your way to take advantage of the offer.
