Dorset Financial expert, Peter Harding explains why, particularly with inflation running high, it’s more important than ever to get the most out of your personal savings allowances by 5th April.
We all need to know that we have cash to hand in case something unexpected happens. Many of us have a combination of cash savings and Cash ISAs. If you’ve had a Cash ISA for more than five years, the tax year deadline is the time to review how well your cash savings are performing.
Low saving rates
Everyone has an annual Personal Savings Allowance. Your Personal Savings Allowance means basic-rate taxpayers can earn £1,000 tax free interest on cash accounts per year. High-rate taxpayers can only earn £500. With interest rates at their current levels, a basic-rate taxpayer can hold around £150,000* in a non-ISA account before they have to pay any tax on their interest. (*Based on the current highest rate of interest for an easy access account is 0.67% – Moneyfacts, Nov 2021.)
Keeping up with Inflation
However, if the returns on your Cash ISA savings aren’t keeping up with inflation, then your spending power is reducing. With interest rates at record lows, cash ISAs may not make the returns that a Stocks and Shares ISA could in the longer-term. It’s another reason to consider whether a Cash ISA is the right place to save for longer term life goals.
When looking at ways to make your savings and investments less taxing, it’s always useful to get some expert help and guidance.
To receive a complimentary guide covering wealth management, retirement planning or inheritance tax planning, contact Peter Harding Wealth Management on 01202 830730 or email peterhardingwm@sjpp.co.uk.
Peter Harding Wealth Management is a trading name of Peter Harding Practice Ltd.
This article is featured in the March issue of the Dorset Business Focus magazine. Read on the online version here.