Where are we with ISAs? The deadline is approaching...

Traditionally, this is the time of year when Enable’s IFAs are busy making sure everyone has used their ISA allowance. It is normally a time when ISA providers boost their offerings to encourage savers to invest in ISAs before the start of the new tax year. This year however, rather than raising rates, providers have been cutting them; some savers are facing some of the worst cash ISA deals on record. Since the Budget, George Osbourne has announced that there will be a new ISA available from next year for savers under the age of 40, for more information please contact one of our team.

Charlotte Nelson, finance expert at Moneyfacts says, "ISAs were once the go-to product for savers as they offered not only tax benefits but also some of the better rates." "However, this is certainly no longer the case thanks to almost constant rate decreases."

One factor that’s been taking its toll on ISA rates is the personal savings allowance (PSA). The PSA, which is due to come into place in April, seems to have only added to the downward slide in ISA rates: soon £1,000 of interest earned will be tax-free, which means that the importance of getting an ISA each tax year has been reduced. But as ever diversification is important. "Relying on the PSA alone for your tax-free pot is a gamble – eventually rates will go up, and the amount savers can save tax-free will subsequently diminish." For this reason ISAs shouldn't be overlooked, particularly if you have larger amounts to save. In addition, ISAs can be passed on to spouses after death, which is worth contemplating when weighing up your long-term interests." Says Charlotte.

There's no guarantee how long the PSA will last, if the allowance is withdrawn in future years, your savings interest will be taxable again, whereas any money built up in an ISA will remain tax-free for life. So it’s probably still worth using up your ISA allowance and Enables IFAs in Bishops Stortford can help you find the best deals.

Source: Money facts


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