Many happy ISA returns!

Bookmark and Share

Published:
09/03/2010
Topic:
Press Release,Money,Savings

Basic rate taxpayers who have used their cash ISA allowance every year since launch are almost £3,000 better off.

With the battle for this year's cash ISA pots heating up following the recent launch of Santander's 3.5 per cent Flexi ISA, and Barclays launching the Golden ISA paying 3.1 per cent just yesterday, analysis from experts at moneysupermarket.com has today clearly spelt out why using your ISA allowance is a no-brainer, particularly in an environment where rates are at an all-time low and inflation remains a threat to savers' real returns.

Basic-rate taxpayers who have saved the full allowance in the average cash ISA every year since ISAs were first introduced in 1999 will be £2,900 better off than a saver who has not used their allowance and saved in a like for like basic easy access account instead. The difference is even more marked for higher-rate taxpayers - those who have saved diligently within an ISA wrapper will have earned interest of £12,622 compared to someone who has saved in a basic easy access account who will have just over half of that amount, £7,030. Anyone invested fully into the top paying ISAs would have a total pot of over £46,000 as a result.

Kevin Mountford, head of banking at moneysupermarket.com said: "UK taxpayers who have managed to save in a cash ISA year after year since launch should be feeling pretty smug, and who can blame them! The tax free interest, particularly for higher tax rate payers is worth smiling about. 

"Consumers that can afford to save should be looking at ISAs, without doubt. Although rates are currently low, we have started to see some attractive offerings from the likes of Santander and Nationwide, and the benefits of these tax-efficient wrappers should not be overlooked. Savers should also make sure they remain vigilant, and check the rates of their existing ISA's. Many older ISA accounts will have dropped rates significantly so transferring funds is essential; in most cases funds are transferable to their new ISA without losing the tax free status, although you do need to adhere to the ISA transfer rules. .

"The cash ISA allowance for under 50s is increasing to £5,100 from 6 April giving a greater incentive for tax paying savers. Over 50s have benefited from this limit since 6 October."
A recent poll of over 1,200 moneysupermarket.com users has revealed apathy towards ISAs with almost four out of ten respondents (37 per cent) planning not to use their ISA allowance for 2009/2010. A further 26 per cent said they couldn't be bothered to save at all, which is particularly worrying.

-Ends-

Notes to editors:

* Calculations based on using the full ISA subscription each year using the best buy Cash ISA for each tax year.

Total Interest Over 10 Years for an ISA saver

£12,622.88

Total Interest Over 10 Years for a Standard Tax Payer

£9,727.03

Difference

£2,895.84

Total Interest Over 10 Years for an ISA saver

£12,622.88

Total Interest Over 10 Years for a Higher Tax Payer

£7,030.05

Difference

£5,592.83

Top paying ISA's

Year

Monthly Interest

Deposit

Balance

Interest

1999-2000

5.85%

£3,000.00

£3,000.00

£175.50

2000-2001

7.25%

£3,000.00

£6,175.50

£447.72

2001-2002

5.79%

£3,000.00

£9,623.22

£557.18

2002-2003

5.00%

£3,000.00

£13,180.41

£659.02

2003-2004

4.35%

£3,000.00

£16,839.43

£732.52

2004-2005

4.60%

£3,000.00

£20,571.94

£946.31

2005-2006

5.40%

£3,000.00

£24,518.25

£1,323.99

2006-2007

5.20%

£3,000.00

£28,842.24

£1,499.80

2007-2008

6.50%

£3,000.00

£33,342.04

£2,167.23

2008-2009

6.50%

£3,600.00

£38,509.27

£2,503.10

2009-2010

3.61%

£3,600.00

£44,612.37

£1,610.51

Total Interest Over 10 Years for an ISA saver

£12,622.88

Equivalent Savings Rate for Standard Tax Payer

Year

Monthly Interest

Deposit

Balance

Interest

1999-2000

4.68%

£3,000.00

£3,000.00

£140.40

2000-2001

5.80%

£3,000.00

£6,140.40

£356.14

2001-2002

4.63%

£3,000.00

£9,496.54

£439.88

2002-2003

4.00%

£3,000.00

£12,936.42

£517.46

2003-2004

3.48%

£3,000.00

£16,453.88

£572.60

2004-2005

3.68%

£3,000.00

£20,026.48

£736.97

2005-2006

4.32%

£3,000.00

£23,763.45

£1,026.58

2006-2007

4.16%

£3,000.00

£27,790.03

£1,156.07

2007-2008

5.20%

£3,000.00

£31,946.10

£1,661.20

2008-2009

5.20%

£3,600.00

£36,607.29

£1,903.58

2009-2010

2.89%

£3,600.00

£42,110.87

£1,216.16

Total Interest Over 10 Years for a Standard Tax Payer

£9,727.03

Equivalent Savings Rate for Higher Tax Payer

Year

Monthly Interest

Deposit

Balance

Interest

1999-2000

3.51%

£3,000.00

£3,000.00

£105.30

2000-2001

4.35%

£3,000.00

£6,105.30

£265.58

2001-2002

3.47%

£3,000.00

£9,370.88

£325.54

2002-2003

3.00%

£3,000.00

£12,696.42

£380.89

2003-2004

2.61%

£3,000.00

£16,077.32

£419.62

2004-2005

2.76%

£3,000.00

£19,496.94

£538.12

2005-2006

3.24%

£3,000.00

£23,035.05

£746.34

2006-2007

3.12%

£3,000.00

£26,781.39

£835.58

2007-2008

3.90%

£3,000.00

£30,616.97

£1,194.06

2008-2009

3.90%

£3,600.00

£34,811.03

£1,357.63

2009-2010

2.17%

£3,600.00

£39,768.66

£861.39

Total Interest Over 10 Years for a Higher Tax Payer

£7,030.05

Sourced by www.moneysupermarket.com 05.03.2010

Download This Press Release

Download as RTF

Related Links

Related Resouces

Bookmark and Share

Media contacts

Paul Lawler - PR Manager (Financial Services)
07872 379545
01244 370317
paul.lawler@moneysupermarket.com

 

Nicola Parry - PR Officer (Financial Services)
07872 379549
01244 370318
nicola.parry@moneysupermarket.com

 

Emma Morris - PR Manager (Travel & Shopping)
Travelsupermarket.com
Moneysupermarket Shopping

07775 941689
01244 220671
emma.morris@moneysupermarket.com

 

Clare Francis
Head of Content

07595 067818
01244 220650
clare.francis@moneysupermarket.com

 

Kate Murphy
Media
Communications Executive
01244 221978
kate.murphy@moneysupermarket.com

Related News

More News...