New data reveals UK savers paid a total of £3.8bn into Cash Individual Savings Accounts (ISAs) throughout July, bringing the total for the current tax year so far to £23.7bn – a 22% increase compared to the same period last year.
The Bank of England’s (BoE) latest money and credit report for July revealed that deposits in banks and building societies increased by £5.7bn. This rise was driven by ISA savings and an additional £3.3bn placed in interest-bearing easy access savings accounts.
Despite this, £500 million was withdrawn from fixed-rate savings, and £1.4bn was taken out of non-interest-bearing easy access accounts.
During this period, the average interest rate for fixed accounts decreased to 4.42%, while the average rate for easy access accounts saw a slight increase to 2.14%.
This increase in ISA investments among the public can be attributed to the July’s general election result, which saw Labour defeat the Conservative party to form a majority government for the first time in 14 years.
Eadon & Co Director Tim Eadon said: “With the first budget from the new government fast approaching, but concrete details still few and far between, many people are understandably looking to shield themselves from any new taxes that could be on the horizon.
“The Prime Minister has already cautioned we should expect the tax burden to increase in some form, so we’re likely to see this trend continue over the coming months.
“Whatever October’s announcement brings, now’s the time for savers to be making the most of tax wrappers available under the current rules to avoid paying unnecessary penalties – and optimising their contributions to ensure they see the maximum benefit.”
Note:
This information is for education purposes only – it does not constitute financial advice and should not be acted upon without taking professional advice.
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