Latest news with #CashIsa
The Independent
15-04-2025
- Business
- The Independent
The best cash Isas to open in April 2025 to maximise your tax-free savings
SPONSORED BY TRADING 212 The Independent Money channel is brought to you by Trading 212. Millions of UK savers looking to boost their tax-free savings have now opened a Cash Isa. This special savings account allows people to deposit tens of thousands and saves them from paying tax on the returns, making it an increasingly popular choice alongside regular savings accounts. With the number of people now using Cash Isas, the amount of providers for them has only increased. Big name banks and smaller finance platforms are ramping up competition in 2025 to offer the best interest for savers. Here's everything you need to know about Cash Isas and the best deals on the market. What is a cash Isa? A cash Isa is very similar to a savings account, but with one key added benefit: you will never pay tax on it. Everyone adult in the UK gets an Individual Savings Account (Isa) allowance of £20,000 at the start of each tax year in April. Also similar to normal savings, there are different types of cash Isas to choose from. Some are easy access, meaning the owner can withdraw from them at any point. Others are fixed rate, guaranteeing interest which is usually higher, but locking in the cash for a set period of time. There are other types of Isas too, including Lifetime Isas and stocks and shares Isas, which allow for investing. It is also important to note that you don't need to pick just one. Savers are allowed to open as many different kinds of Isas as they like – the £20,000 tax-free allowance will be spread between them - though some have restrictions within that. What are the best cash Isas on the market? Cash Isas are currently offering some of the best interest rates of any UK savings accounts. This makes them a good option for anyone looking to save under £20,000 this year – or happy to diversify cash to other accounts upwards of that amount. Here's your guide to some of the best cash Isas on the market at the time of writing; rates and products are always subject to change. Best easy-access Cash Isas Moneybox Cash Isa The flexible Cash Isa from Moneybox comes with an interest rate of 5.71 per cent, including a bonus 1.51 per cent for the first three months. However, this interest rate will be slashed if you make more than three withdrawals within 12 months, or if the balance of the account falls below £500. The underlying rate is 4.2 per cent. Plum Cash Isa Financial technology company Plum also offers a Cash Isa at 5.68 per cent, which includes a 2.14 per cent bonus for new customers who keep the account for at least three consecutive months. The bonus is only for three months though, leaving a 3.54 per cent after that period. It's important to note that this rate will drop to 2.5 per cent after four withdrawals, or if the balance of the account falls below £100. Trading 212 Cash Isa Investment platform Trading 212 offers a Cash Isa with an interest rate of 4.5 per cent for all customers - though readers of The Independent can also get an exclusive promotional rate of 4.9 per cent on the platform. There is no minimum balance or limit on the number of withdrawals you can make on this Cash Isa and it is a flexible Isa. Tembo Cash Isa Savings and mortgage platform Tembo offers a Cash Isa at 4.8 per cent, with no hidden bonus rates for new savers or penalties for withdrawals or going below a certain amount. Chip Cash Isa Savings and investments app Chip is currently offering a flexible Cash Isa with a 4.32 per cent interest rate for new and existing customers. Their base rate stays 0.26 per cent under the Bank of England base rate - so this overall rate could reduce as early as 8 May. Is my Cash Isa safe outside of a big name bank? Most of the best Cash Isa interest rates are offered by platforms and services that aren't as well known as the big name banks. This can be a cause of concern for some people, which is perfectly valid as these platforms have not spent the years building up the trust and customer that some of the big banks have gained. When you deposit funds for a Cash Isa into one of these smaller platforms, they will usually put the money into a 'client money account' which is actually generally held with one of the bigger banks. This ensures that it is protected under the Financial Services Compensation Scheme (FSCS) for up to £85,000 per person, per bank. This broadly applies to all of the recommendations in the list, but there are some small differences between each. It is essential to always read the small print on any financial service you are interested in to ensure you understand exactly what is happening to your money - and be aware changing interest rates at the Bank of England can impact the rate you receive if you don't choose a fixed-rate product. When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results.
Telegraph
13-03-2025
- Business
- Telegraph
Victory for savers as Reeves's feared cash Isa raid postponed
Cash Isa reforms will not happen until at least April 2026, giving savers another year to take advantage of the £20,000 allowance, The Telegraph understands. Rachel Reeves is reported to be considering a raid on the tax-free savings vehicle. One City firm has urged the Chancellor to slash the annual cash Isa limit to just £4,000. However, the Treasury has now ruled out reforms in the Spring Statement on March 26. Officials have suggested that changes would not be announced until the Autumn Budget at the earliest, and would not come into effect until April 2026. Financial experts urged savers to take advantage of the delay. Jason Hollands, of wealth manager Evelyn Partners, said cash Isa savers had been granted a 'stay of execution' for the coming tax year. He added: 'Given the much tougher tax environment we're in at the moment, an Isa is a no-brainer. 'Isa allowances are 'use it or lose it', so you should certainly be making the most of the £20,000 allowance before midnight on April 5 if you have the resources to do so. 'Isas are also flexible, so you can always withdraw the money later if you need it.' Ministers have signalled that they are keen on the idea of reducing the tax relief on cash Isas and redistributing the funds in a bid to boost growth. City firms have lobbied the Government to change Isas to encourage investment in shares over saving in cash. One idea proposed to the Chancellor, by fund management firm Fidelity International, is to create a single Isa for cash and shares with a lower £4,000 limit. Ms Reeves has said she wants to strike a 'balance' between money put into cash and shares. There had been speculation that the Chancellor would opt to announce any changes in the Spring Statement, which could have meant new rules coming into effect from the beginning of the new tax year on April 6. She has previously indicated that major fiscal decisions, such as Isa reform, should wait for a full Autumn Budget. More than 18 million people have a collective £300bn saved in cash Isas which allow savers to earn tax-free interest on up to £20,000 each tax year. Wealth managers have warned that cutting tax relief on cash Isas – or scrapping the product altogether – could penalise more cautious savers. Ian Cook, of wealth management firm Quilter, welcomed the delay to the Isa reforms. He said: 'It's a temporary reprieve for savers and they should take the chance to wrap any savings they have in a cash Isa. 'And with interest rates as high as they are, it's worth taking advantage.'
The Independent
07-03-2025
- Business
- The Independent
Airlines, tech and gold: The most popular stocks and funds investors are buying ahead of the ISA deadline
Isa season is rapidly approaching: the end of one financial year and the start of the next one, with investors (and savers!) trying to use up as much of their allowance as possible before 5 April, at which point the £20,000 annual allowance per person resets. While there is ongoing discussion over whether Cash Isa limits could be cut, the overall allowance is a use it or lose it situation - unused allowances cannot be rolled over into the next financial year. At the start of 2025, investors in stocks and shares Isas have been putting money into a range of individual companies and funds hoping to generate returns which can help beat inflation and even interest rates, particularly over the longer term. AJ Bell, one of the UK's largest investment platforms, has shared data on what their Isa customers have been purchasing this year - with some familiar names among the top ten businesses being bought alongside some perhaps more surprising ones. American chipmaker Nvidia, formerly the most valuable listed company on the planet, holds top spot at the start of the year on the platform and is followed by MicroStrategy, a company which essentially buys up bitcoin and which rebranded to Strategy last month. British businesses in housebuilding, insurance and travel also feature in the most popular list. 'DIY investors have been busy filling their Isas ahead of the tax year-end on 5 April,' says Dan Coatsworth, investment analyst at AJ Bell. 'Isas are a great way to build up wealth and shelter your gains and income from the taxman. 'Exposure to global and US markets and generous dividend payers were key themes, as you might expect from Isa users. However, there were a few surprises including a shift in behaviour by investment trust fans, and stock investors were taking quite a few contrarian bets.' From bitcoin to trainers, houses to energy Those contrarian bets perhaps include fashion shoe retailer JD Sports, a long-time favourite of British investors but one whose share price is down more than 40 per cent across the past six months. Airline Easyjet is up three per cent across the same timeframe, but is down ten per cent over a year. The full list of most popular stocks and shares on the platform, by net flows from 1 January to 28 February, were: These choices could be grouped into three different categories, added Mr Coatsworth, including 'higher-risk investments linked to cryptocurrencies and AI, generous dividend payers such as retirement savings group Phoenix, and out of favour companies where investors are potentially buying in the hope of a rebound.' Spread your eggs across multiple baskets Outside of individual shares, data on funds which offer a more diversified approach showed an ongoing preference by investors for low-cost passive or tracker shares, as opposed to more expensive actively managed funds. Funds typically focus on a sector, theme or geographic region, so an S&P 500 fund for example tracks the performance of the biggest companies in the United States, while a physical gold fund would seek to follow the performance of the precious metal's price by holding bullion. AJ Bell's most popular list of funds were as follows: 'UK investors are increasingly losing faith in the ability for fund managers to consistently outperform the market. By shunning active funds, investors are choosing the lower cost route of simply tracking the market. It's easy to see why,' Mr Coatsworth said. 'Research by AJ Bell recently found that less than a third (31 per cent) of actively managed funds have beaten a passive alternative over the past 10 years.' Finally, data on investment trusts also shows the yield on offer from payouts. Weakening share prices in some areas, and widening discounts to the Net Asset Value (NAV) of them have pushed yields up in some cases. Here are the top ten trusts on AJ's platform this year and their yields at the time of publishing: City of London Investment Trust - 4.7% TwentyFour Select Monthly Income - 8.5% JPMorgan Global Growth & Income - 3.9% Law Debenture - 3.5% 3i Group - 1.5% The Renewables Infrastructure Group - 10.0% Greencoat UK Wind - 9.1% Henderson Far East Income - 11.3% Abrdn European Logistics Income - 6.1% Supermarket Income REIT - 8.8% 'Investors may view such trusts as bargains given many trade on large discounts to the value of their underlying portfolio. Large yields offer compensation for the shares being out of favour but there is still uncertainty in when or if those discounts will start to narrow,' Mr Coatsworth noted. All profits from dividends or capital appreciation are tax-free when made in an Isa wrapper.
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The Independent
28-02-2025
- Business
- The Independent
Is it time to scrap the Cash ISA? Experts' view on Rachel Reeves' controversial plan to get UK investing
SPONSORED BY TRADING 212 The Independent Money channel is brought to you by Trading 212. One of the biggest talking points this year has been the UK's Cash Isa and what alterations Rachel Reeves may make to it. Early suggestions included removing it entirely, but more recent news has suggested a cap on the amount which can be saved, which is currently set at £20,000 per person per tax year (across all Isa types). For the uninitiated, saving money within an Isa makes it exempt from tax on interest earned. It is estimated that around £300bn in total sits in Cash Isas, which some have suggested could be put to better use were it invested, for example in a Stocks and Shares Isa. While it's true that over the long term this can generate better returns than cash, this approach doesn't factor in how or when people may need to access their cash. This has led to widespread debate among City executives, politicians and beyond about potential reform. But what about the people who use them? To get a broad representation of how a range of people use, or could in future use, a cash Isa, The Independent has spoken to a professional trading platform, a wealth management company for high net worth individuals, a money coach, a female money platform and one of our own money writers. The reasonings and insight each gave for different areas of society were varied, but the overarching message was clear: The cash ISA must remain and is an important part of UK society's wealth-building. And, even if a reduction in allowance won't hurt everybody, there's absolutely no guarantee it would have the seeming desired effect of pushing individuals towards investing instead - at least, not without far more guidance, education and understanding. And, let's be clear: that's exactly what these newly launched Independent Money pages are intended to bring for people. When it comes to building an investing culture throughout the population, the UK has a long way to go. But in savings, while people know how and why to do it, there also remains a wide gap in the ability of some families to do so, with a Yahoo Finance report last year showing 12 per cent of low income families have under £100 in savings. A crucial stepping stone Even so, with cash Isas being shielded from tax and an ideal location for anybody to contribute to, there's still a big role for them to play whether for those starting out on savings journeys or for those who have a bigger pile built up - especially, as Wealth Coach Sara Jane Maxwell notes, if they are not yet ready to move into investing. 'A cash Isa is a great tool. It works really well for people who are nervous or unsure about time horizons or don't want to venture into investments yet,' she told The Independent. 'I feel like it will be reduced, possibly not withdrawn altogether, because the government wants us to be investing rather than holding cash. 'When people come to me they usually have a cash Isa already but might not be utilising it to the full potential. I don't work with lots of people with huge balances in them, so the annual limit being reduced wouldnt impact a tremendous amount - but sometimes they might feel that being in an Isa [rather than regular savings account] puts their money at risk - so the more awareness of them, the more we make people have more interest in them, is a positive.' The Independent 's money writer Marc Shoffman agrees on cash Isa being a stepping stone towards future investing potential - and says branding is an important part of overall awareness on the subject which may be better served changing rather than some of the sweeping and, at times, complicated reforms which have been suggested elsewhere. 'People are naturally and understandably cautious about investing. Having personal finance education in school would help so that children build an understanding of how to generate wealth beyond how Hollywood or TV shows depict it. 'Getting people to save is hard enough so having a cash Isa provides a comfortable starting point and the products play a key role of putting money away for short term goals. Scrapping cash Isas isn't a good idea as there is no guarantee that the money would automatically go into backing British stocks, which appears to be the Treasury's aim. 'Better education and maybe a rebranding stocks and shares Isas to an 'investment Isa' would be a start in making this area more appealing.' The saving-investing knowledge gap That latter point on City execs and politicians seeming to think people will automatically divert more money towards investing is an important one, and a recurring theme. If people aren't already investing, there are reasons behind that - fear, knowledge, misunderstanding, timeframes, personal preference and risk appetite are all just some of the factors at play. It simply won't follow that being allowed to save less in one tax-free environment means the remainder will straight away be sent into shares, British or otherwise. Saving and investing platform Trading 212 's Head of Treasury, Gabriel May, explained that trying to time-lock using a cash Isa will simply see a change of location, not of mindset. 'People should be free to decide how they save. Forcing them to shift from cash savings to riskier products by undermining the Cash Isa is not only unrealistic but also questionable in intent. If this option is removed, people will simply move their money to less beneficial savings accounts, ultimately reducing their returns,' he said. Laura Pomfret, of female money platform Financielle, adds further context around that knowledge gap. Many people might have an idea of what they want to achieve in money terms, but be 'overwhelmed' about how to start, let alone get there. 'They come when they feel overwhelmed in their money journey,' Ms Pomfret says. 'It might be consumer debt, wanting to own a home, a large expense on the horizon. They usually have a financial goal in mind and not know how to get there.' Jumping straight into investing, then, isn't an ideal approach for many, even if they have started saving already. Entry point and wealth building The idea of savings being the only part of a person's, or a family's, wealth is a risky one over the long-term perhaps. But it's absolutely the most important one initially, and only once that is in place can they reasonably be looking further ahead at other products, other ways of looking after their futures. 'We start clients at the beginning: work to a budget which they then manage,' Ms Promfret explains. 'Is there an excess at the end of the month? If not, it's debt, overspending, credit lines. After sorting that, the very first thing we recommend is building an emergency fund, then stronger savings. 'It builds after that.' Cash Isas clearly have to remain available, but also accessible - even if people cannot fill out £20,000 or close to that a year, restricting what they can put in - without regard for family circumstance or size, or even stage of life, might simply prove restrictive for the long haul. Trading 212 's Mr May said: "It's a highly appealing financial product. It encourages saving by offering an attractive combination of a high interest rate, tax benefits, and flexible withdrawals. Building a financial safety net is essential for everyone's financial well-being. Our clients' data demonstrates that the product serves as an entry point into the broader Isa family, promoting long-term wealth accumulation.' Steve Jordan, director and co-founder at Five Wealth, said that while many clients grow more wealth through shares investments, he was 'strongly against' any removal of the cash Isa and pointed out the demographic who would be most at risk, were they somewhat backed into a corner where investments was their only tax-free approach available. 'A large proportion of the population only have cash savings and don't receive any financial planning advice,' he told The Independent. 'Low-risk savers and pensioners would potentially be disproportionately affected; the result for these people could be forcing them into paying more tax on their cash savings or forcing them into capital-at-risk investments that may not be suitable. 'Savers without much investment knowledge could make the move without the benefit of advice and could be unprepared for the volatility that may affect them.' It also shouldn't be just about moving from cash to stocks and shares Isas either, Mr Jordan notes, with Junior and Lifetime Isas being alternatives too. 'What about the Jisa and Lisa? These investments can have a timescale which is much shorter than that needed for investment. Shares may not be appropriate at all for people saving for a house or money that may be needed at 18. I agree that longer term excess savings are probably better invested in markets than in cash on a return point of view, but that's not always the only consideration,' he said. And yet, perhaps it won't be as dramatic as it all sounds. Perhaps political inertia will again reign supreme, as Ms Pomfret suggests - and actually, discussion around limiting something that some people don't already use might just encourage them to find out about it and get started. 'It will at least get press and attention. I don't think Ms Reeves will reduce it so much in the end - it'll be the usual approach of say something and then the end result is not as bad.' Whatever the eventual outcome for the cash Isa, it's clear that for long-term wealth building, saving remains the start of the journey and a critical step, even if longer-term, more people should certainly be looking to begin investing. When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results.
