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Aprils Tax Changes To Savings, What Will Happen To Interest Rates On Isas?

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What do people think will happen to interest rates on savings post April when most savers will get to keep all the interest up to £1000 for basic rate tax payers and £500 for 40% rate payers.

For example the Halifax currently pays £5 a month after tax for its current account uses, after April will the Halifax up this or pocket the money itself? Is this why Santander has upped the fee on its 123 account?

Secondly what happens to ISA rates? Will they have to increase as some current accounts will offer better saving rates or will the bankers cut rates on current taxable accounts?

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Was wondering this when it was poorly announced, still no clarification from any institution but the banks will win as usual ,also I think Osborne has thrown away the original fag packet.

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cash isas will continue - but they are only really worth it now for higher rate taxpayers with tens of thousands in savings who have maxed out their high interest current accounts and regular savers where you can get 3 to 6 per cent.

For most basic rate taxpayers with small pots they are not good value given the woeful rates unless you go fir a 5 year fixed rate and even those are barely 2 per cent now.

Edited by MARTINX9

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I agree about cash ISAs, they seem like a bit of a waste of time now. Plus the limit is so high now that you don't really need to worry about losing last years limit. I just drip feed extra savings into a stocks and shares ISA now. No idea what will happen with interest rates on these accounts or current accounts, due to the changes. We will find out soon.

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Cash isas I have found pay lower rates than other accounts equivalent gross rate, the benefit of having them is almost nil....except the income is ignored when calculating tax credit entitlement, correct me if I am wrong. ;)

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You don't do cash ISA's for the interest rate, you do it for the tax free potential.

If... OK... IF... interest rates went up, the debtors are going to start squealing big time. You have to start thinking about policies like a tax on unearned income to subsidise some sort of mortgage relief etc. The UK saving rate is now down to 4.4% and falling, who cares about savers? If it happened maybe money in an ISA would escape that tax. Plus there's always the option to switch money in a Cash ISA to a Stocks and Shares ISA, if we start printing money Japanese style. So you escape CGT on the share profits.

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