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With this years tax year ending on Tuesday (5 April), savers have been reminded that they have until this date to use up the remainder of their tax free ISA allowance – or they will lose it.
However, as tempting as it is to leave this until the last minute it is not advisable, as many banks offering the best ISA rates will soon run out of budget and be forced to pull these high paying accounts before the deadline.
All savers in the UK currently have an annual tax free savings break of £10,200, half of which can be set aside into cash ISA and the rest (or up to the full £10,200) into investment ISAs. Read More »
As the new tax year is fast approaching, with it comes another tax free Individual Savings Account (ISA) allowance.
But this year brings some good news for the 20 million ISA savers in the UK, as the government has announced plans to increase the ISA limit.
As of 6 April, the amount savers can put away into ISAs to avoid paying tax on the interest will rise by £480 per year to £10,680.
In the Emergency Budget in June, the government had initially said that there would be a yearly increase to the ISA allowance, but there was a lot of speculation as to whether or not this promise would be kept.
However, the Treasury stayed true to its word, with plans to introduce the new limit of £10,680 for the 2011-12 tax year, up from the current limit of £10,200.
This means that savers can either put up to £5,340 into a cash ISA with the option of investing the remaining £5,340 into a stocks & shares ISA; invest up to the full amount into a stocks & shares ISA; or a combination of the two.
In October 2009, the ISA limit rose from £7,200 to £10,200 for all UK savers aged 50 and over, which became available for everyone else at the start of the current tax year.
The new year has brought some good news for savers, as the amount of compensation banks offer against deposits has increased.
Savers can now enjoy cover of up to £85,000 (£170,000 for joint savings accounts) on funds held within a single banking institution, after the Financial Services Compensation Scheme (FSCS) announced the £35,000 increase.
The protection limit is offered per institution rather than per person, so if money is spread between several institutions savers can effectively increase the amount of protection they have on savings.
For example, if you put £85,000 into a NatWest savings account, then opened a separate account with Santander and deposited the same amount, you will benefit from full protection.
Find out more through our guide: Secure Savings and Compensation.
An FSCS spokeswoman said the heightened protection was due to new European legislation which matched the compensation limit to the current eurozone rate of €100,000 for savings accounts held with a UK authorised bank, building society or credit union that fails.
“The increased limit has resulted from the Deposit Guarantee Scheme Directive,” she said.
“Having one limit across Europe makes it easier for consumers to understand how much protection they are entitled to.”
The extension has been long overdue, after originally being set up in 1994 to provide EU savers with a safety net in case a bank failed.
The Individual Savings Accounts (ISA) allowance is expected to increase by £470 at the start of the next financial year.
The news comes after the previous increase which was brought in earlier this year, pushing the annual ISA allowance from £7,600 to £10,200, of which half can be stored in a cash Isa.
The ISA limit is set to rise again to £10,670, which will come into force at the beginning of the new financial year (April 2011). Although only half can be added to a cash ISA, investors can place the full amount into stocks and shares ISAs and pay no income tax on any returns. Read More »
NatWest has added a bonus rate onto is online e-saver account which has pushed the rate up to a market beating 2.89% AER.
The NatWest savings account Includes a bonus rate of 1.85% Gross for the first 12 months, which is added to the standard rate of 1.00% AER/Gross (variable).
Phil Sheehy, head of NatWest savings, described how the “straightforward” the e-savings account is while being part of the organisation’s Helpful Banking pledge.
He said: “This new offer gives a market-leading rate without the restrictions often associated with a high interest rate.”
The new savings account will help savers looking to avoid having their funds eroded by inflation.
According to the Council of Mortgage Lenders (CML), mortgage lending hiked to £11.5bn last month, a 24% rise from February.
The figure also reflected a 3% rise compared to March 2009, when the market reached its nadir in the wake of the credit crunch.
The CML said that despite this rise in activity, the property market was still relatively subdued, pointing out that total mortgage lending in the first quarter of 2010 was still significantly lower than in the last quarter of 2009.
“Despite the increase in activity late last year and a subsequent fall early this year – due to the end of the stamp duty holiday – the underlying position looks to have barely changed,” said CML economist Paul Samter.
“But with the gradually improving economic backdrop and interest rates still low, we continue to expect a gentle improvement in market conditions later in the year,” he added.
The CML added that from next year, lenders would need to find around £300 billion in order to repay money borrowed from the government through emergency support schemes.
As a result, it said, the mortgage market would continue to be restricted.