Nobody wants to pay more tax than they have to and when it comes to saving, keeping all of the interest you earn is surely a priority.
Fortunately there’s good news ahead, with the annual tax-free savings allowance increasing on 6 April, the start of the new tax year, from £15,240 to £20,000.
This is how much savers can invest in an Individual Savings Account (ISA) over the next 12 months and not pay any tax. All savers should qualify for an ISA allowance, although tax benefits are subject to change and individual circumstances.
Savings may be split across different kinds of ISA but you can only open one new account of each type during a given tax year.
According to Sophie Dwyer, product manager at the West Brom, there has never been a better time to avoid paying tax on your hard-earned savings.
“ISAs are in addition to the Personal Savings Allowance, which enables basic rate tax payers to earn £1,000 in interest without being taxed,” she said.
“They represent the perfect starting point for savers thanks to their tax-free status and now is a good time to shop around and find a deal that suits your savings goals.
“However, a quick word of caution about ISAs. The annual allowance cannot be carried over, so if you don’t use it up by the end of the tax year, it’s lost for good.”
The West Brom has cash ISAs available in branch or online, while stocks and shares ISAs can be arranged through our partner Wren Sterling.
Unlike cash products, the value of investments in a stocks and shares ISA may fall as well as rise and you could get back less than you invest.