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jordan flight 45 What is an ISA and how can it ben

 
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 PostWysłany: Pon 11:42, 23 Maj 2011    Temat postu: jordan flight 45 What is an ISA and how can it ben Back to top

An ISA is a tax wrapper around a savings accounts or investment products which allows provides all savers with a tax break on the interest they earn.
What is an Individual Savings Account (ISA)?

But consumer behaviour analyst Mintel found that just 8% of savers transfer their Isas to a new provider.
Mr Brown's idea proved to be popular. Banks and building societies now battle for custom - especially during the 'ISA season' at the turn of the tax year - with the launch of high profile marketing campaigns targeted at new customers.
Once your cash is in an ISA, none of the returns will be subjected to tax. You can keep adding to the pot year by year to build up a significant tax-free haven.
The tax-free savings system first began in 1999 when the then-chancellor Gordon Brown suggested this new concept of saving would encourage people to save.
"They are very happy for us to be getting such small rates of interest. We have to push them into giving consumers better information to get a fair deal."
"It is in the banks interests that we do not move," says Mike O'Connor, chief executive of Consumer Focus.

The watchdog says that the marketing frenzy results in banks and building societies offering "bonus" introductory offers, or teaser rates.
If you do want to switch providers, make sure you speak to your proposed ISA provider, as some products do not allow transfers. Never attempt to move the funds yourself, as this could result in you losing the wrapper from your pot, so b
Investors can also benefit from ISAs, as you can also make use of the investment ISA annual allowance of up to the same amount - £5,100. These work in the same way, allowing you to place stocks & shares within the tax-free wrapper and pay no tax on the returns you make.
Consumer Focus says that people are failing to seek the best ISA rate, with the average interest rate for all cash Isas stood at just 0.41% earlier in the year.
Savers are limited as to how much they can invest into ISAs, with a total cash ISA allowance of £5,100 per year. ISAs work to a one-way gated system that means your limit will decrease as you deposit into an ISA, but this allowance will not increase if you make a withdrawal against it, so they can be very rewarding for those that leave their money to grow.
However, this new breed of deals are not always a bad thing, as long of you stay on top of your account and switch providers each year to keep the rate high.
Normal savings accounts require savers to pay income tax on the interest they earn, with the rate of tax depending on the tax bracket they fall within - Basic rate of 20% - for those that earn £0-£37,400, higher rate of 40% for earnings of £37,401-£150,000 and the recently introduced additional rate of 50% for anyone that earns more that £150,000 per year.
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How do I switch?
Once this introductory rate comes to an end, usually after a year, the rates fall significantly [link widoczny dla zalogowanych], making the once market leading rate fall below average.
What is the watchdog concerned about?
This, it has said, is down to banks and building societies make it difficult for savers to move their funds to a different account when a provider lowers their interest rate.
The fair trading regulator is looking to make a super-complaint about the current state of the UK Individual Savings Accounts (Isas) market.According to watchdog Consumer Focus, around 15 million savers make use of a cash ISA, however potential ISA holders are missing out on £3bn a year of interest.
Around a third of adults in the UK have a cash Isa, collectively savings £158bn.
How much can I invest?
But the British Bankers' Association recently prompted the rules to be reviewed, which led to new regulations that mean savers must now be notified if their bank plans to slash interest rates under new rules from the Financial Services Authority


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