{"id":44278,"date":"2023-12-18T09:39:17","date_gmt":"2023-12-18T09:39:17","guid":{"rendered":"https:\/\/lethal-industry.com\/?p=44278"},"modified":"2023-12-18T09:39:17","modified_gmt":"2023-12-18T09:39:17","slug":"top-cash-isas-with-high-interest-rates-as-savers-falling-into-tax-trap-surges","status":"publish","type":"post","link":"https:\/\/lethal-industry.com\/world-news\/top-cash-isas-with-high-interest-rates-as-savers-falling-into-tax-trap-surges\/","title":{"rendered":"Top cash ISAs with high interest rates as savers falling into tax-trap surges"},"content":{"rendered":"

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A growing number of savers are falling into the savings tax trap a bank has warned, with nearly a third of those breaching their Personal Savings Allowance (PSA) doing so for the first time.<\/p>\n

Paragon Bank’s survey of over 1,700 savers found that 37 percent generated enough interest on their savings to breach their PSA in 2023. Among these, 30 percent were caught for the first time as savings rates returned to pre-global financial crisis levels.<\/p>\n

Rising interest rates, cited by 43 percent of those who breached the PSA, were the primary driver behind the surge.<\/p>\n

However, increased saving balances also played a role, with 22 percent of respondents attributing their PSA breach to this factor.<\/p>\n

The PSA, a tax-free allowance that shields a portion of savings interest from income tax, currently stands at \u00a31,000 for basic-rate taxpayers and \u00a3500 for higher-rate taxpayers.<\/p>\n

READ MORE: <\/strong> British Gas offers energy bill support in Post Office Pop-Ups – find the nearest<\/strong><\/p>\n

Additional-rate taxpayers do not have a PSA, meaning all their savings interest is liable to income tax.<\/p>\n

However, due to rising savings rates, the balance required to exceed the PSA for higher-rate taxpayers has shrunk considerably in recent months.<\/p>\n

A higher-rate taxpayer would now need a balance of just \u00a310,000 in a non-ISA account paying five percent interest to breach their PSA.<\/p>\n

Derek Sprawling, Paragon Bank’s savings director, said: \u201cThe Personal Savings Allowance has largely flown under the radar in recent years due to the low-interest rate environment, but rising rates have brought it back into focus.\u201d<\/p>\n

However, he noted: “With three out of 10 savers now paying tax on their savings interest, it’s crucial to employ tax-efficient strategies, such as using ISAs, to protect your hard-earned savings and considering having interest \u2018paid away\u2019 on longer-term bonds.”<\/p>\n

<\/p>\n

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He added: \u201cParagon Bank has long championed the tax-free benefits of ISAs, advocating for their use even in periods of low interest rates. As savings rates continue to rise, ISAs remain an essential tool for savvy savers seeking to safeguard their financial well-being.\u201d<\/p>\n

Top Cash ISAs<\/strong><\/h3>\n

For those who need instant access to their cash ISA, Metro Bank<\/strong> tops the list with an AER of 5.11 percent. There is no minimum investment amount, interest is paid annually, and withdrawals can be made at any time.<\/p>\n

In the fixed rate sector, Virgin Money\u2019s Fixed Rate Cash ISA Exclusive (Issue 9)<\/strong> tops the list for one-year fixes with an AER of 5.51 percent. There is no minimum investment amount to get started, interest is applied annually, and earlier access will be subject to 60 days\u2019 loss of interest.<\/p>\n