Money Insider: Darling's ISA tax break gives you just 76p
Saturday 27 March 2010
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
Simon Read: Frozen in time - the expat British pensioners who deserve a better deal
Weekly Money: Round-up of the personal finance stories you may have missed 19-23 January
Bargain Hunter: From The Outsider to 1984, catch a cut-price classic, read it in the rye
Donald MacInnes: My wasted hours in the retail deserts of Dixons-Carphone
Money Insider: Smart alternatives to the pensioner bond
- 1 Rowan Atkinson to sell £10 million McLaren 'supercar' he crashed into a tree and a lamppost
- 2 The truth about 'girl things': Three cheers for Heather Watson's honesty
- 3 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 4 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 5 Men behaving badly: Urinating while standing, 'manspreading' and the gendering of selfishness
British Muslim leaders outraged after Eric Pickles says followers of Islam should 'prove their identity'
UK terror fears: My jihadist son returned from Syria mentally scarred – now he is being ignored
Nigel Farage: NHS might have to be replaced by private health insurance
Billy Crystal: 'Stop shoving gay sex scenes in my face'
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
iJobs Money & Business
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...
£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village