ISA Changes Could Spark Saving
The question on many savers lips as we head towards the end of the financial year is “are ISAs really the best place for your savings these days?” and with tumbling interest rates the question is a just one. ISA rates have generally fallen by more than those for easy access accounts as banks seek to scrape as much profit out of customers as possible during these tough times.
But there is yet hope. Conservative leader David Cameron has proposed changes to the way income from savings are taxed which would see those on the basic rate of tax pay zero tax on income from investments whether they be in the form of savings or stock market transactions.
This would mean the stocks and shares part of your ISA would be extended above the current limit. Cameron also suggested that increasing the ISA allowance to £10,000 would mean a huge shift in the culture of saving and ensure the future of the British economy is built on a frugal saving-spending balance.
The advice being handed out at the moment for those looking to achieve the highest savings rates is to open a fixed rate ISA. Now these accounts will require you to leave your investment untouched for periods ranging from one to three years but in the current climate they offer the best defence against further interest rate cuts.
So all things considered, the ISA market looks a little brighter than it did a few months ago and with the tax free benefits leading to higher real rates than easy access accounts, an ISA is still the best way to invest.
