Julian Knight: Equities ripe for the taking as the ISA season starts

Cash individual savings accounts offer low rates of interest, so consider the stockmarket versions

Around now is the time when the "ISA season" kicks off in earnest. This is when, traditionally, most of the big providers reveal the rates they will tempt customers with in advance of the 2012-13 tax year deadline for investment in an individual savings account. Many savers hold off using their tax allowance in order to grab the best rate as the deadline hoves into view.

But according to Moneyfacts the number of cash ISAs available today and the average rate they pay is far below the levels of just a year ago. In February 2012, 385 ISAs were available paying an average 2.55 per cent. Today the numbers available are down to 309, while the average rate is a paltry 1.74 per cent. Yet Bank of England interest rates are still 0.5 per cent so why are rates falling?

It seems that the Bank of England's Funding for Lending scheme is having a crushing effect on your savings rates. In short, the banks and building societies don't have as much need for your money as they once did because they are finding it through the scheme and the less gummed-up wholesale market. Savers, this ISA season, will be paying for cheap lending to the banks.

So what to do? Hopefully nearer to the deadline there may well be renewed competition and some eye-catching best buys but you may be wise to use your ISA allowance (provided you can take the risk of potential losses) for the stockmarket. You can invest up to £11,280 in a stockmarket ISA while a maximum of £5,620 in a cash ISA. You can also mix and match these two products provided the maximum you pay into the cash ISA element doesn't exceed the £5,620 limit. This way at least you won't be at the mercy of the Bank of England's financial engineering.

Le grand tax faux pas

Incredibly, London is now France's sixth biggest city according to the number of French people setting up home in the capital.

Why are our French friends coming to Britain, the revamped and modern cuisine? Probably not. Our innovative high-fashion industry? Ermm, again, no. Even if these things were a factor Gallic pride would prevent them from admitting it. The answer is more mundane – it's our tax regime.

The French government of François Hollande seems hell bent on replicating the tax policy of 1970s Britain. They haven't quite reached the ridiculousness of 98 per cent tax as under Labour chancellor Denis Healey but they are nudging up to 75 per cent. As a result, many of France's brightest and best are coming to the UK, especially London.

Of course, this is stupidity by the French on le grand scale and our own Prime Minister has angered the Hollande government in the past by saying he would lay out the red carpet for French tax exiles. But I can see a time when the boot could well be on the other foot.

Let's say that post 2015 – or sooner if there were to be a Con-Lib collapse of the coalition – we were to have a Lib-Lab government with Ed Balls's hands on the economic tiller. The structural deficit – created in the 2000s by a near doubling of government spending in real terms – will still be in place and markets will by then be spooked by Britain's huge debt pile. The timeless cry of "tax the rich" will be heard.

The fact is, though, that the "rich" make up such a tiny proportion of the population that taxing them in the French way will be of little worth. Instead, what we would likely see is an asset tax – it would be spun as a "wealth tax" in the same way as the current "mansion tax" – and this could will be indiscriminate, hitting people regardless of whether or not they are income poor and asset rich. At that point, it may well be Brits who are fleeing to France to take advantage of its "low" tax regime.

Watching the political debate in this country over tax-and-spend is very depressing. It's as if many of our leading politicians have learnt nothing from the past 30 years or the ways in which globalisation in essence destroys national tax take.

Government has to adapt itself to a low tax-take, freelance world but the message is not getting through – if you have even an average priced house, some shares, savings and a pension pot then the taxman may come looking for you post 2015.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
i100

Other places that have held independence referendums
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
PROMOTED VIDEO
News
news

Sport
footballThe latest scores and Twitter updates from tonight’s games, featuring Bayern Munich vs Man City and Chelsea vs Schalke
News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
News
peopleThe Times of India said actress should treat it as a 'compliment'
Arts and Entertainment
Jack Huston is the new Ben-Hur
film

It scooped up an unprecedented 11 Academy Awards when it was first remade in 1959

News
news

Watch this commuter wage a one-man war against the Circle Line
Property
Home body: Badger stays safe indoors
lifeShould we feel guilty about keeping cats inside?
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

Arts and Entertainment
Toby Jones (left) and Mackenzie Crook in BBC4’s new comedy The Detectorists
tvMackenzie Crook's 'Detectorists' makes the hobby look 'dysfunctional', they say
Arts and Entertainment
Maxine Peake plays Hamlet at Manchester's Royal Exchange
theatreReview: Maxine Peake brings emotional ferocity to Shakespeare's starring part
Extras
10 best table lamps
indybest
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee Recruitment Consultant Birmingham

    £18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Recruitment Consultant - Soho - IT, Pharma, Public Sector

    £20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

    Sales Executive

    £20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week