Have you started to use this year’s Cash Isa yet? From 6 April you can put up to £20,000 into an Isa. There were fears that this amount might be reduced for Cash Isas in the Chancellor’s Spring Statement, but, for now at least, it remains as the annual limit to put into an Isa and it can still be in cash, shares, or a mixture of the two. However, a hint of what might be ahead was buried in the accompanying documents, where this paragraph appeared:

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“The Government is looking at options for reforms to Individual Savings Accounts that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission.”

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So it looks as though there will be a consultation, possibly quite soon, on changes to encourage Isa savers to invest their money rather than keep it in cash. For now, though, there is no change.

If you’re thinking, “£20k! Chance would be a fine thing!”, remember that any amount in a Cash Isa earns interest tax-free – you do not even have to report it.

So whether you’re saving for a holiday, a wedding, a house deposit or just some rainy-day money, it should always be in an Isa if you’re a taxpayer. Many pay better rates than ordinary savings accounts, where only the first £1,000 of interest is tax-free for basic rate taxpayers. You can find best buy rates by searching “Savings Champion” online, which will direct you to tables at an independent financial adviser called the Private Office. Its tables are accurate and the most up-to-date.

ISA tax benefits calculator - Hargreaves Lansdown

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As I write, they show that you can get up to 4.8% a year in an easy-access Cash Isa – check the terms and conditions carefully for any penalties if you take your money out. Rates are variable, so may fall during the next 12 months, but are 0.5% better than a one-year guaranteed rate. People under 40 saving for a deposit on a first home should consider a Lifetime Isa, which boosts savings by 25%. But there are strict rules that you should check carefully before opening one.

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