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Take cover. Our savings are likely to be under scrutiny for the next five years as the new Labour government focuses on finding more money.
We will probably have to wait until the first budget – likely in September – to find out whether the crucial savings cuts will be affected.
The easiest gains will be the amount you can earn in pre-tax interest, known as your personal savings allowance, and the upper limit of £20,000 you can channel into cash ISAs.
Until then, it is not clear whether any of them are in the Finance Minister’s sights, but given the uncertainty, cash fixed-term deposits should be the first choice for any saver.
Appropriation of funds: We will probably have to wait until the first budget, likely in September, to find out whether the crucial savings cuts will be affected.
This is because once your money is in your cash ISA, you won’t have to pay any tax on your interest.
Gone are the days when easy-access ISAs paid much less than similar ordinary savings accounts.
The average rate for ISAs is 3.33 per cent, compared with 3.11 per cent for taxable accounts, according to rate checkers MoneyfactsCompare.
You can currently save up to £20,000 each year in cash ISAs, which work in the same way as ordinary savings accounts.
With rates capped at 5 per cent, that’s up to £1,000 in tax-free interest if you max out your ISA this year – £200 sheltered from the taxman if you pay basic rate tax on your interest and £400 for higher rate taxpayers.
So where to start?
Move as much as you can from your usual easy-access account into a cash ISA. It may not benefit you now, but it could in years to come.
If you’re among the millions of savers who have their money readily available at their traditional bank, don’t just transfer it into your cash-equivalent ISA – these pay disappointing rates of just 1.2 per cent, while others pay around four times as much.
Opt for a flexible, easy-access ISA type as this prevents you from being penalised if you need to access your money.
Flexible accounts allow you to withdraw money and replace it without affecting your £20,000 annual ISA allowance, as long as you replace it in the same tax year. The best rate comes from the Chip Cash ISA app, at 5.1 per cent.
If you prefer an online account, Ford Money, with an interest rate of 4.6% on £1, is a good option. A big advantage is that the bank pays the same interest rate to all savers on the account.
NS&I asks not to charge bonuses
When I checked my NS&I Prize Checker app to see if I had won any prizes in this month’s draw, a new request appeared.
In bold capital letters, NS&I told me: ‘YOUR BONDS WILL NOT BE FORGOTTEN.’ It continued: ‘Do not be tempted to cash in your Bonds if you think they will not bring you new luck.
‘If you do this, you will lose a drawing, which means less chance of winning a prize.’
Is NS&I concerned that holders might be able to call in their bonds at a time when it has been tasked by HM Treasury with raising £9bn (give or take £4bn each way) in its financial year which began on 1 April?
According to figures published so far, it only took in £58m in the first two months, compared with £2.4bn in the same period last year.
But I won’t be selling my Premium Bonds. As the tax burden on savers increases, the fact that you don’t pay tax on the prizes is their big appeal.
Sy.morris@dailymail.co.uk
Money for the elections
