Money Insider: Darling's ISA tax break gives you just 76p

There was little room for manoeuvre in the Chancellor's final Budget before the election, with cutting the £178bn deficit understandably his top priority. Savers may have been clinging to the hope he would look kindly on them as they struggle to find a half-decent return on bank or building society deposits.

While there was no pre-election giveaway, Mr Darling did introduce index-linking for tax-free savings, so from April 2011, the annual ISA allowance will increase in line with inflation.

But savers shouldn't get too excited by this move. Let's say, for example, that inflation settles at 2.5 per cent and the cash element of the ISA allowance increases from £5,100 to £5,227. There will be even more confusion as to exactly what the ISA limit is and, when it comes down to what you will actually receive, it is not exactly a life-changing sum.

If you were to put your additional £127.50 allowance into an ISA paying 3 per cent, you would earn an extra £3.83 in interest; in a normal savings account paying 3 per cent, you would receive a net return of £3.06. So the tax-free benefit for a full year would amount to 76p – hardly a vote-winner.

A way of giving savers a real break would have been to allow the full £10,200 limit to be used in a cash ISA, even if it was just an interim measure for a year or two until traditional savings returns begin to recover from their record lows.

Mortgage round-up: Competitive rates available for homebuyers with deposits

The doubling of the lower stamp duty threshold to £250,000 is a boost to the housing market, but you have to question why it wasn't introduced at the turn of the year when the temporary increase to £175,000 ended.

Not having to fork out a one-off tax payment of up to £2,500 will help those struggling to meet lenders' stringent deposit requirements. But in the scheme of things, it still will not be enough to help many would-be homebuyers when they are trying to amass between £20,000 and £35,000.

If you're fortunate enough to be able to raise the necessary deposit, or are looking to move home, the competitive mortgage market continues to throw up some attractive new deals. For those with a 15 per cent stake, Yorkshire Building Society this week cut its two-year fixed-rate mortgage by 0.7 per cent to 4.49 per cent, with a respectable fee of £495 and free valuation and legal fees.

The Post Office sliced a full 1 per cent off the price of its five-year, fixed-rate mortgage and is now a tough act to beat at 4.89 per cent, with a £999 fee available up to a generous 80 per cent loan to value.

If you have at least a 40 per cent deposit to put down, then ING Direct is offering a lifetime tracker mortgage priced at just 2.49 per cent (base plus 1.99 per cent) with a fee of £945. It also comes with the sweetener of free valuation and conveyancing service for remortgage customers.

Borrowers' struggles to find the required level of deposit have been one of the key factors holding the housing market back, and while the stamp duty extension is not going to open the floodgates, much like the wider economic recovery, it is another small step in the right direction.

Savers suffer from dip in price inflation

Aside from the Budget, there was little in the way of good news for savers this week, although a sharp dip in Consumer Price Index inflation, from 3.5 per cent to 3 per cent, means basic-rate taxpayers now have to find lower pre-tax savings rates of 3.75 per cent to protect the spending power of their cash.

This is still a struggle unless you opt for a fixed-rate bond or fixed-rate ISA. Let's hope the analysts have got their sums right and inflation soon returns to within its 2 per cent target.

On the products front, there was very little activity in the way of new accounts. It was, however, disappointing to see so many good deals being pulled during the last seven days.

We saw Saga withdraw its best buy – a five-year fixed-rate bond at 5.1 per cent; the hugely popular High 5 account from Investec was closed to new customers; the 4 per cent, two-year fixed bond from Coventry Building Society was also pulled; and Aldermore removed its competitive one-, two- and three-year fixed-rate ISAs from sale.

Andrew Hagger is a money analyst at Moneynet.co.uk

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

News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Sport
Romelu Lukaku puts pen to paper
sport
News
Robyn Lawley
people
Arts and Entertainment
Unhappy days: Resistance spy turned Nobel prize winner Samuel Beckett
books
PROMOTED VIDEO
News
people
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
News
i100
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
News
people
Extras
indybest
Travel
Ryan taming: the Celtic Tiger carrier has been trying to improve its image
travelRyanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?
Sport
Usain Bolt confirms he will run in both the heats and the finals of the men's relay at the Commonwealth Games
commonwealth games
Life and Style
Slim pickings: Spanx premium denim collection
fashionBillionaire founder of Spanx launches range of jeans that offers 'thigh-trimming construction'
News
Sabina Altynbekova has said she wants to be famous for playing volleyball, not her looks
people
News
i100
Life and Style
tech'World's first man-made leaves' could use photosynthesis to help astronauts breathe
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

    Senior Investment Accounting Change Manager

    £600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

    BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

    £450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

    Senior Analyst - ALM Data - Banking - Halifax

    £350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

    Java developer - Banking - London - Up to £600/day

    £500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

    Day In a Page

    Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

    The day America’s love of backyard tigers led to a horrific bloodbath

    With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
    Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

    How Samuel Beckett became a French Resistance spy

    As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
    We will remember them: relatives still honour those who fought in the Great War

    We will remember them

    Relatives still honour those who fought in the Great War
    Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

    Kodak's last-ditch bid to keep celluloid alive

    Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
    Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

    Acting in video games gets a makeover

    David Crookes meets two of the genre's most popular voices
    Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

    Could smartphones soon be diagnosing diseases?

    Health Kit and Google Fit have been described as "the beginning of a health revolution"
    Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

    Can we learn to love Ryanair again?

    Four recent travellers give their verdicts on the carrier's improved customer service
    Billionaire founder of Spanx launches range of jeans that offers

    Spanx launches range of jeans

    The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
    10 best over-ear headphones

    Aural pleasure: 10 best over-ear headphones

    Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
    Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

    Commonwealth Games

    David Millar ready to serve up gold for his beloved Scotland in the end
    UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

    UCI Mountain Bike World Cup

    Downhill all the way to the top for the Atherton siblings
    Save the tiger: The animals bred for bones on China’s tiger farms

    The animals bred for bones on China’s tiger farms

    The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
    A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

    A former custard factory, a Midlands bog and a Leeds cemetery

    Introducing the top 50 hidden spots in Britain
    Ebola epidemic: Plagued by fear

    Ebola epidemic: Plagued by fear

    How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
    Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

    From 'Parks and Recreation' to 'Guardians of the Galaxy'

    He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star