With ISA allowances due to increase for the first time since their introduction in 1999, Yorkshire Bank is encouraging savers to make the most of their tax efficient ISA allowances in this tax year and the next.
Just a quarter of adults in the UK currently invest in cash ISAs* and just 27% of those who do hold a cash ISA are expected to invest the full £3000 this tax year. This means millions of savers are not taking advantage of the annual allowance.
The end of the financial year is an ideal time to ‘spring clean’ finances and the increase in ISA allowances means savers will be able to invest up to £7,200 in the next tax year, with a maximum of £3,600 being cash and the remainder in stocks and shares ISAs.
Gary Lumby, Yorkshire Bank’s head of retail, said: “The increased ISA allowance is great news for savers as it means they will soon be able to enjoy even more tax efficient saving – but before then they should make sure they’ve taken full advantage of their current allowance for this tax year.
“Savers can transfer spare cash or savings in traditional accounts to ISAs before the 5th April to make sure they’re earning the maximum interest before the end of this tax year! This can be done on the phone, via the internet or in our branches.”
Easy as I.S.A.
Increased allowances aren’t the only things due to change on the 6th April 2008. Mini and maxi ISAs will no longer exist and savers will now be able to invest in two separate ISAs each tax year - a cash ISA and a stocks and shares ISA.
The maximum amount which can be invested in ISAs is £7,200. Up to £3,600 of this can be invested in a cash ISA, while the remainder of the allowance can be invested in a stocks and shares ISA. This compares to the current maximum amounts of £7000 in a stocks and shares ISA and £3000 in cash ISAs. TESSA only ISAs will automatically be reclassified as cash ISAs, while all Personal Equity Plans (PEPs) will become stocks and shares ISAs.
Lump Sums or Regular Payments?
Research has shown that one in four of us (25%) invest lump sums into an ISA, while 29%* prefer to pay in on a regular basis. But for people who prefer to save regularly, an added bonus of the increased allowance is that they are easily divisible into 12 equal monthly payments to spread throughout the year – making it easier than ever to get into the savings habit.
Cash or Stocks and Shares?
Stocks and shares ISAs are among the easiest and least risky ways to invest in the stock market, particularly if you’re looking to let your money grow over the next five years or more. Cash ISAs guarantee at least the value of what’s invested along with a good rate of interest.
Put the most in to get the most out
For ISA savers who have accumulated sizeable savings over the years - which could well run into tens of thousands of pounds – Gary Lumby says: “Those who have been taking advantage of their tax efficient ISA allowance for some years now need to ensure that their savings are earning the maximum interest possible. It’s all too easy to pay into an ISA and forget about it. Yorkshire Bank is currently offering 5.40% on ISA balances over £15,000 – we’ll take care of the switch from start to finish and all savers need to do is decide what to do with the extra interest.
“However, for savers who have reached your threshold for the year, Yorkshire Bank are currently offering a rate of 6% on its 12 month Term Deposit Account giving savers even more ways to earn interest on money.”
Notes to Editor
*Research - ISAs - UK - Mintel Report June 2007
About Yorkshire Bank
Yorkshire Bank was founded in 1859 in Halifax, West Yorkshire. Yorkshire Bank has 190 retail branches, a strong personal customer base and a growing business capability in the North of England and the Midlands. Yorkshire Bank is a trading name of Clydesdale Bank plc, a subsidiary of the National Australia Bank Group of companies. Yorkshire Bank joined the Group in 1990. In 2006, Yorkshire Bank was voted the UK's 'Best Business Bank' by the Forum of Private Business.
For more media information contact:
Carol Young Yorkshire Bank 0845 60 35 44 7 07764 975 460
Diane Roskell / Kelly Gough / James Hickman Ptarmigan Consultants 0113 242 1155