Newspaper article Evening Gazette (Middlesbrough, England)

Make Savvy Saving Your New Tax Year Resolution

Newspaper article Evening Gazette (Middlesbrough, England)

Make Savvy Saving Your New Tax Year Resolution

Article excerpt

HAPPY New Year! Well, new tax year that is (party poppers at my house). That means you now have a brand new tax-free savings ISA allowance. Now, you may be thinking "Hold up, didn't you write about best ISAs last time?" You'd be right, but that was last year when you had to rush to use your 2012/13 allowance.

Now the slate's wiped clean, everyone has a brand new and bigger amount they can save tax free, PS5,760. So, while much of what I'm saying will seem to be the same, I make no apology for that. It's crucial to go through it again, and protect your savings from tax. Here are the 10 things you need to know to maximise the gain this 2013/14 tax year. 1A CASH ISA's just a tax-free savings account. It sounds more complex than it is, but it's simply a normal savings account, where you don't pay tax on the interest. That's it. Don't overcomplicate it in your head. Just like normal savings, there are a host of different options, including easy-access cash ISAs (where you can take your money out when you want) and fixed accounts to guarantee the rate. So, if you've money in savings and don't use your ISA allowance, it's time to - you'll earn more.

2ISAs smash normal savings even if their rates are higher. With normal savings, a basic taxpayer loses 20% interest in tax and higher 40%. So a 3% cash ISA returns as much as a 3.75% savings account for a basic rate taxpayer, and 5% for higher rate. 3DON'T think you're tying your cash up. Many confuse ISAs with their now long deceased predecessors, Tessas. These meant locking cash away. ISAs can be used in the short term too, with easy-access deals letting you get money out whenever you want. The rules state you can put in PS5,760 by April 5, 2014, and can withdraw it anytime. The only stipulation is, once done, it then can't be returned. An example to help: put PS5,000 in, and you've PS760 more allowed. If you then withdraw PS1,000, that's irrelevant. You can still only put PS760 more into it. 4THE top easy access deal pays 2.5% AER.

Coventry (coventrybuildingsociety.co.uk) pays 2.6% and it guarantees to be at least 2.6% till April 5, 2014. Or Cheshire Building Society (www.thecheshire.co.uk) is 2.3% but has a big 1.8% bonus until October 2014, which effectively acts as a rate guarantee till then. Both are still variable rate accounts, meaning you can't guarantee the rates will stay high long term. Monitor them every couple of months and, if they drop, ditch and transfer. At the start of the new ISA year new accounts are launched regularly. To keep up to date on the best, see www.moneysaving expert.com/cashISAs. 5GUARANTEE a rate of 3% AER. With fixed ISAs, you effectively lock cash away for a period in return for guaranteed rates.

Your ISA needs to be continually managed to get the best returns Technically, you can access your cash before men, though there are heavy interest penalties if you do so. …

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