Thursday, 31 August 2017

Cash ISA saving falls by a third as tax rules change



There has been a dramatic drop in the number of Cash ISAs being opened and in the amount saved in the wake of the Brexit vote.

Official figures from the taxman show there were 1.6 million fewer accounts taken out in the last financial year - falling to 8.5 million.
 
 
The biggest fall was reserved for the amount saved - dropping by £19.5bn in 2016/17 to £39.2bn.


It represents a reduction of 33% on the previous tax year, HM Revenue & Customs (HMRC) said, at a time when other data has shown household saving rates hitting all-time lows during 2017 as prices rise at a higher rate than wages.


Financial analysts blamed the introduction of the personal savings allowance last year, which allows basic rate taxpayers to earn £1,000 of savings without paying any tax (£500 for higher rate taxpayers).


It means the interest to be earned from many bank account savings is on par with Cash ISAs - whose best rates are currently only around 1%.


Analysts suggested the cut in interest rates in the wake of the EU referendum result were also a factor.




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