Latest news with #taxfree
Yahoo
a day ago
- Business
- Yahoo
Brits 'slam hated ISA plan' in new setback for Rachel Reeves
Chancellor Rachel Reeves was believed to be originally set to announce ISA reforms at her Mansion House speech last week, but following significant pushback, the Labour Party government U-turned on the decision. Now the focus has shifted to the autumn budget, with finance experts still suggesting the Chancellor is plotting to slash the tax-free limit of a cash ISA from £20,000 to £10,000. However, new research from the specialists at Nottingham Building Society has suggested that UK savers are against Rachel Reeves' reported plan to change ISAs. Read more: Families hit by two-child benefit cap can claim extra cash in new update The current ISA rules allow for savers to deposit £20,000 tax-free, split between cash, stocks and shares, lifetime, and innovative finance accounts. Of the 2,003 UK respondents to the building society study (who have or have previously had Cash ISAs), 55% of all savers oppose the move. This rose to 76% of over-55s, while 78% of the respondents believe the government should be encouraging tax-free saving through tools like Cash ISAs, not discouraging it. One of the reasons behind the potential cash ISA cuts is to push savers into using Stocks and Shares. However, only 38% of Cash ISA holders would consider switching to a Stocks and Shares ISA if the allowance is cut. One in three said they'd simply save less, while a fifth (20%) of cash ISA savers said a cut to the allowance would affect their ability to put down a deposit on a home. This rose to 41% among 25–34-year-olds. Additionally, 34% fear it would hit their retirement saving and 36% say it would harm their ability to build an emergency fund. Harriet Guevara, Chief Savings Officer at Nottingham Building Society: 'We're pleased the Chancellor has opened the door to proper consultation on ISA reform. Any changes to a system that millions rely on to build financial security must be based on evidence and real-life saver behaviour. 'The Cash ISA allowance is a mainstream tool used by everyday people to manage their money sensibly. "More than half of our fixed-rate ISA customers used the full £20,000 allowance last year, and among those saving in-branch, that figure rises to 65 per cent. This shows that for many, the Cash ISA is a lifeline. 'We support the government's aim to boost investing and grow the economy, but limiting savers' choices by cutting the Cash ISA allowance is not the right way to do it." She added: 'It also has direct consequences for mortgage lending. ISAs held with mutuals like Nottingham Building Society support lending to aspiring homeowners. "Capping what people can save risks capping what we can lend, and that's directly at odds with the government's goal of doubling the size of the mutual sector. 'This consultation must put the saver at the centre. That means retaining choice, rewarding good savings behaviour and supporting financial resilience for the long-term.'
The Sun
4 days ago
- Business
- The Sun
Pension warning over easy mistake that could cost you £22,500 in your golden years
PENSION experts have warned of a mistake that could cost you up to £22,500 in your retirement. If you're planning on taking money out of your pension while you're still paying into it, you need to be aware of a rule around the annual allowance. 1 Typically from the age of 55, you're allowed to take out up to 25 per cent from your pension without paying any tax, as long as you take it out in lump sums rather than a regular income. The Money and Pensions Service (MaPS) is warning people that they could end up hugely reducing the amount they can contribute to their pension if they take out more than the tax-free allowance. 'If you want to start taking an income from your pension - for example an annuity or drawdown - on top of your tax-free cash, your annual allowance could drop significantly," Rebecca Fearnley, from MaPS, told The Sun. "Taking just the tax-free cash, which can be up to 25% of your pension pot, means that your annual allowance won't be affected. 'For most people, the annual allowance is £60,000, but this will reduce to £10,000 if you start drawing money from your pension while you're still paying into it, so it's important to be aware of, as you could lose a significant amount of tax relief. If you were to lose £50,000 of your tax-free pension allowance, you'd suddenly be looking at a tax bill of £10,000 on £50,000 for a basic rate taxpayer. If you're a higher rate taxpayer, that's £20,000, while an additional rate taxpayer pays £22,500. Hargreaves Lansdown head of retirement analysis Helen Morrissey says the rule "can land you with a nasty unexpected tax bill if you are caught unawares." "It affects those who have so-called flexibly accessed their pension so you won't be affected if you have only taken your tax-free cash. "It has been a key issue for people who may have flexibly accessed their pension during a period when they were out of work and then want to rebuild it once they get a new job," she added. You can visit for more guidance around taking money from your pension, or contact your pension provider. What is the annual allowance? YOUR annual allowance is the most you can save in your pension pots in a tax year (6 April to 5 April) before you have to pay tax. You'll only pay tax if you exceed the annual allowance, which is £60,000 this tax year. Your annual allowance applies to all of your private pensions if you have more than one. However, as soon as you take a lump sum from your pot, this affects how much you can continue to save for retirement. The annual allowance falls to £10,000. If you want to carry on building up your pension pot, this option might not be suitable. How can I take money out of my pension? You can take up to 25 per cent of your total pension as a tax-free lump sum, normally from the age of 55. However, the maximum you're allowed to take out in this way is £268,275. There are other ways that you can take money from your pension pot. Some providers allow you to withdraw cash directly from your pension pot, either in its entirety or as smaller cash sums. You may also be able to buy an annuity from an insurance company that will provide you with regular payments from your pension for life. You can ask your pension provider to pay for this out of your pension pot. Some annuities will be for a fixed number of years, while some will continue to pay your spouse or partner after you die. The amount you get will depend on how long the insurance company expects you to live for and how many years they'll need to pay you. They will take into account things like your age, gender and health, as well as interest rates and the size of your pension pot. You can also invest into a drawdown, which is a way of taking money out of your pension pot to live on when you retire. This gives you more flexibility over how and when you receive your pension. You can take up to 25% as tax-free lump sum and the rest of your pension remains invested, meaning it can grow. You can then choose whether you want a regular income or amounts as and when you need them. It's important to note that your invested pot can go down as well as up, so you could run out of money. You can find out from your pension provider which options they offer.
The Independent
4 days ago
- Business
- The Independent
Trading 212 Cash ISA: Earn 4.98% tax-free interest today
Looking for the best cash ISA rates in 2025? Trading 212 is offering The Independent readers an exclusive 4.98 per cent interest rate for the first 12 months – one of the highest available. Find out how to secure this tax-free savings opportunity before it's gone. 'A cash ISA provides a tax-free fixed rate of return on your savings. It can be a great place to hold your short-term savings such as money for emergencies or to put towards holidays as you can usually access it when you need it. Plus, you will earn better interest than leaving it in your current account and don't have to give any of the returns to the taxman. 'The returns won't be as high as investing through a stocks and shares ISA but it is still a good way to save if you are cautious about putting too much money at risk,' says Marc Shoffman, The Independent 's money writer. If you're new to investing or saving, he's put together a comprehensive guide on ISAs and below you can read more about the new Trading 212 offer for our readers. How to secure a 4.98 per cent interest rate with a Trading 212 Cash ISA If you're new to Trading 212, now is the perfect time to get started. By registering through this exclusive link, you can enjoy a 4.98 per cent interest rate on your Cash ISA deposits for the first 12 months. This incredible rate is guaranteed for 12 months after you claim it, meaning you can enjoy this premium rate while your savings grow, tax-free. At the end of the 12-month promotional period, your rate will continue at the core Trading 212 interest rate. To make it even easier, you can use the promo code 'TI' when registering, to manually apply for this offer. Whether you choose to use the link below or the code, securing your 4.98 per cent rate couldn't be simpler. Why choose Trading 212? Trading 212 has built a reputation for providing accessible, user-friendly financial products and services that cater to seasoned investors and newcomers. Here's why their Cash ISA stands out in 2025: Market-leading 4.98 per cent interest rate for the first 12 months – amongst the highest Cash ISA rates in 2025. Tax-free savings – grow your money without paying tax on the interest earned. Easy sign-up process – use promo code "TI" to activate your exclusive offer. Trusted financial platform – known for user-friendly investing and savings. Don't miss out on this limited-time offer This exclusive promotion is only available to a very small group of partners, which means it's a limited-time opportunity you don't want to miss. Whether you're a new client eager to get started or an existing client looking to enjoy better rates, now is the time to act. Sign up today using the exclusive link or use promo code 'TI' to claim your 4.98 per cent interest rate and enjoy the benefits of a Cash ISA that lets your money grow, tax-free. Start your savings journey with Trading 212 today.
Daily Mail
7 days ago
- Business
- Daily Mail
The Little-known cash Isa perk that lets you EXCEED your allowance: SYLVIA MORRIS
There is a useful benefit of tax-free cash Isas that is not well known and is often hard to find on providers' websites. It goes by the name of the additional permitted subscription, or APS for short. Not all providers offer them – including a major building society and many top payers on easy-access accounts. The APS gives you a one-off extra Isa allowance following the death of your husband, wife or civil partner. As the surviving spouse or civil partner, you are entitled to an extra Isa allowance equal to the amount they held in cash Isas with any number of providers. You can then carry on earning tax-free interest on the money. You don't inherit the Isa, but can use the money to open one in your own name. Crucially, it does not count towards this year's £20,000 allowance but comes on top. Broadly, you have three years from the date of death to use it. Check your provider: The additional permitted subscription benefit gives you a one-off extra Isa allowance following the death of your husband, wife or civil partner But if administering the estate takes longer than this, you have up to an additional 180 days after it is complete. You need to ask each of your late partner's Isa providers for a certificate that says you are entitled to this allowance. Ask your chosen provider to organise the transfer directly into an Isa in your name. Under the Isa rules, you can open your new Isa with the existing provider or move it to a new one. But if you want to use the same provider, they can choose whether they will accept the APS – and many don't. Providers that often appear among the best buys that don't accept them include Marcus, Shawbrook Bank, Paragon, Charter Savings Bank, Kent Reliance, Leeds BS, Close Brothers, Cynergy, Ford Money, Hodge Bank, Secure Trust, Vida Savings, United Trust Bank and app-based accounts Tembo, Chip, Moneybox and Plum. Paragon and Plum tell me that they hope to do so soon. The big banks that do include Barclays, Halifax, HSBC (but only if you have a current account with it), Lloyds, NatWest, Santander and Virgin Money. But their easy-access rates are generally below 1.5 per cent. National Savings & Investments accepts the additional allowance paid into its Direct Isa, paying 3.5 per cent. With cash Isas under threat from Rachel Reeves, it is crucial that you make the most of them now.
Times
15-07-2025
- Business
- Times
Is it too late to save £20,000 into a cash Isa?
Q. Is it too late to open a cash Isa and get the £20,000 annual allowance? If Rachel Reeves changes the rules to reduce that amount, will it take effect for this tax year?Name supplied In short, no, it's not too late to open a cash Isa and take full advantage of the £20,000 annual tax-free allowance. There has been much speculation about when the chancellor might announce reforms to the cash Isa and what these might look like. Rachel Reeves is expected to announce plans to consult the finance industry on cash Isas, so we will have to wait until this is concluded before knowing the details of any changes for definite. • Why the cash Isa shake-up was put on pause That said, it is extremely unlikely that any reduction in the cash Isa allowance (if indeed that is what the chancellor eventually decides to do) would take effect for the 2025-2026 tax year. It is also expected that any reforms would not be retrospectively enforced, meaning if you saved the full £20,000 into a cash Isa this year or have accumulated more than £20,000 from previous years, it will most likely not be affected by any future changes. But you shouldn't wait for the details of any changes to be confirmed to start thinking about using your annual Isa allowance. If you have the funds, it has always been a good idea to use your Isa allowance as early in the year as possible because of the benefit of compound interest. The longer you have your money in a tax wrapper (such as an Isa) the longer it has to grow tax-free. This is true of cash Isas and also the stocks and shares Isas. For the past 6-12 months the government has been talking about 'getting the balance right' between cash savings and stocks and shares investing. I do not agree that the government should lower the cash Isa limit, but its goal to get more people investing is worthwhile. We are a nation of fantastic savers but we could and should be investing more. From a practical perspective, it may be worth really considering if the right thing for you is to use 100 per cent of your £20,000 allowance within a cash Isa, or whether this is the year to consider putting some of it in a stocks and shares account. Another option you could consider is the Lifetime Isa, which can be used to save for your first home (up to a value of £450,000) or retirement. You have to be under 40 to open one, and you can save £4,000 each tax year until you are 50 and the government will top it up by 25 per cent. If you withdraw it before you are 60 for any reason other than buy qualifying first home then you will lose 25 per cent — eating up the bonus and even some of your own savings. The £4,000 does form part of your overall £20,000 allowance, but the government bonus does not, so it can actually help you save £21,000 into Isas in one tax year. It's important to remember your Isas can be used for different financial goals. A Lifetime Isa can be of use for the big life goals of retirement or buying your first home; a cash Isa is more suitable for short-term savings or emergency funds; and a stocks and shares Isa is designed for long-term investments (over at least five years, and preferably longer), aiming for higher returns.
