Save even more tax-free

Savers have been under immense pressure over the last few years, and tax-free savings have been a welcome haven when maximising returns. This tax year brings some more positive news...

Felicity Hannah: This is the year when the coalition cuts start to bite and inflation is likely to stay high, but there is some good news.

After all, the new tax year means a new ISA allowance for the nation’s savers. The amount you can save has risen in line with inflation, so you can save and invest up to £10,680 tax-free over the next 12 months.

How you save it is up to you. Up to £5,340 can be saved into a cash ISA, or you can save as much of the allowance as you like into stocks and shares.

But how much of a difference does a tax-free account make? analysis shows that a basic rate taxpayer who’d saved their full allowance each year since 2009 would be more than £3,300 better off than if they’d kept the cash in a standard savings account.

A higher rate taxpayer could have earned almost £6,500 more by making full use of their ISA allowance.

Now, quite often the banks hold back their best rates and deals until the end of the financial year. But this year, there are some fantastic cash ISA offers already available.

You might be better off investing your cash now and starting to earn tax-free returns. The market-leading easy access cash ISA rate at the moment is 3.30% - so if you took advantage of that straight away, you’d earn £176.22 tax-free this year.

The sooner you save your allowance, the sooner you can start protecting your returns from the tax man. And you don’t need to have five grand ready to save right now. With an easy access ISA or a regular saver account, you can add what you can each month and gradually fill up your pot.

And don’t forget your existing ISA savings. If you have existing cash ISA savings from previous tax years, you can move it into an account with a better rate, just check the provider accepts transfers.

Please note: all rates were accurate at the time of production.

Did you enjoy that? Why not share this article

Take control of your energy bills

Our handy tips and tools will help make sure you never overpay again

Popular guides