Working in the financial industry for over 30 years, Rachel Thrussell is the leading independent expert on UK savings products. Her views are constantly in demand from both the industry and the press.
Is an ISA still the best place to save, as it seems to me that similar non-ISA accounts pay far more in interest?
It is true that the top two-year bond, from Bank of London and The Middle East, for example, pays 2.10%, while the best two-year ISA pays 1.70% (Al Rayan Bank), and with the Personal Savings Allowance (PSA) meaning basic rate taxpayers can earn up to £1,000 in savings income tax-free (£500 for higher rate taxpayers), the obvious advantage that ISAs once held in respect of being tax-free has been diluted. What ISAs still have in their advantage is that the tax benefits built up in them are cumulative, meaning savers can ensure that ever larger sums are sheltered from tax year-on-year. While interest rates are relatively low, the PSA is currently adequate for most to avoid paying tax on their savings without using an ISA. However, if savings rates continue to rise, tax could quickly become an issue. It is also worth noting that cash ISAs typically allow more access to funds.
|1 Year Fixed Rate Bond||1.22%|
|2 Year Fixed Rate Bond||1.46%|
|3 Year Fixed Rate Bond||1.66%|
|4 Year Fixed Rate Bond||1.94%|
|5 Year Fixed Rate Bond||1.99%|
|21 March 2018|
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