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22 Feb 2017

Cash ISA rates fall as savers look to use their allowance before tax year ends

As the end of the tax year approaches, ISA owners have just weeks left to use their allowance. This is Money shares some advice for would-be savers looking to cash in before the deadline.

The current rules allow for individuals to put up to £15,240 into a cash ISA before April 6th in order to automatically be eligible to earn some extra tax-free interest on their money. It is worth considering however, that as each April the tax year resets, so will your tax-free allowance.

As per usual for this time of year, banks and buildings societies start prying on the public to open new accounts by launching new offers to coax in savers. Yet, as This is Money notes, cash ISAs normally lag slightly behind what you can earn on a standard taxable account and currently, the market remains relatively quiet.

To give you an idea of some of the top one-year bonds, Charter Savings Bank is currently offering 1.6%. Comparably, in terms of a fixed rate, one-year cash ISA, Virgin Money is offering just 1.05% – a third less.

Elsewhere, this tax year provided the opportunity to earn up to £1,000 basic interest on money in taxable accounts without needing to pay tax on them. However, for higher earners, it sits at £500.

As such, theoretically, if you invested £15,240 into a taxable fixed rate bond, you could potentially earn £244 worth of interest and not need to pay tax, providing that you have not used up your personal savings allowance elsewhere.

Copyright M2 Bespoke 2017

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