Tax-free savings with a cash ISA
Are your savings really working as hard as they could for you? If they are in an ordinary bank or building society account, the answer is probably ‘no’. For tax efficient saving,your cash could be growing tax-free in an Individual Savings Account, or cash ISA.
Interest growth on your savings is regarded as income, and as such is subject to income tax, just in the same way as your salary is taxed. As this is done within the account, many people are unaware that tax has actually been deducted from the interest they have received. But the fact is, that if you are a basic rate taxpayer, this means that your savings growth could be taxed at 20%, or for a higher rate taxpayer at 40%.
As with so many aspects of financial planning, good independent advice is the key to being aware of your alternatives. In this case, the way to avoid paying unnecessary advice tax is with cash ISA savings.
Cash ISAs are tax free savings accounts, so interest growth in cash ISA accounts is not subject to income tax, which gives you an automatic saving, right away.
Would you like to find out how you can save tax-free with an ISA? Contact our savings experts online with a savings enquiry or ring 0800 678 5929 now.
The cash ISA account was introduced in 2000 as a tax incentive to encourage consumers towards tax efficient saving. It has been a runaway success, and ISA accounts are now held by over a third of UK households. ISA savings have achieved a high degree of consumer acceptance as the keystone of tax efficient saving and a great alternative to the traditional bank savings account.
You have a maximum annual ISA allowance totalling £11,280 (in 2012/13), of which £5,640 can be cash ISA savings, and the remainder can be used for savings in a stocks and shares ISA account.
When comparing the cash ISA to the bank or building society account, it comes down to one very simple question: do you want to pay tax you do not need to pay – or would you rather take up the government’s tax free savings incentive, and opt for tax efficient saving in a cash ISA?
Ask us today how to save money with an ISA. Contact our savings experts online with a savings enquiry or ring 0800 678 5929 now.
11052012 – JOR
