Are ISA allowances heading up?
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Was it a simple turn of phrase or a deliberate hint at the future?
Ed Balls, the economic secretary to the Treasury, said last week that the maximum limit for tax-free saving and investment in individual savings accounts (ISAs) would continue to be "at least £7,000" each year (see News, page 19).
Although we probably won't receive any more details until the pre-Budget report - expected later this month - the financial industry has jumped on the possibility that the sums allowed inside these tax-efficient vehicles could rise.
Rachel Thrussell of financial analyst Moneyfacts says the Government needs to do more "to create the savings culture it desires".
Like many in the industry, she would like to see the maximum limit for mini cash ISAs increased from £3,000.
"This type of ISA will be more widely used [than stocks and shares accounts] by the main audience the Government is aiming for," she says
"The limit will be outdated over time. With the real value falling every year, perhaps the limit could be index-linked."
And if providers can make cost savings from the Government's proposed simplification of ISAs, she adds, consumers could also benefit in the form of higher interest rates.
Anyone with money to save - and who hasn't used up their annual allowance - should waste no time in getting it stashed away in a mini cash ISA.
Those who do so can benefit from rates of more than 5 per cent; many accounts also offer penalty-free access.
It's a "no brainer", according to Sue Hannums from independent financial adviser AWD Chase de Vere.
"If you've got any money in cash, even if it's just £100, then a mini cash ISA should be your first port of call. Why pay tax if you don't have to?"
Ms Hannums picks out the Direct ISA from National Savings & Investments, paying 5.3 per cent.
"This is a simple easy access account, although it does require a minimum investment of £1,000."
For those with a little less to put by, she recommends the easy access account from Kent Reliance building society, paying 5.21 per cent on balances of just £1.
"There are some mini cash ISAs with bonuses around at the moment," adds Ms Hannums. "But I prefer the pure simplicity of accounts that don't have a bonus. That way you can open the account and leave it without worrying about the rate falling when the bonus drops away."
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments