BM Savings launches 5% ISA
BM Savings has launched a market-leading fixed-rate cash ISA for the new tax year.
At 5% for five years this is the highest-paying ISA on the market but as it's for the new tax year's allowance of £5,340, new accounts can't be opened until 6 April.
Like most of the top-paying accounts this is a limited offer, so savers will need to act quickly to benefit. However it is possible to apply now and to transfer in existing ISAs which will be credited to the account in the new tax year.
The rate is fixed for five years and a minimum deposit of £500 is required.
Withdrawals are allowed but are subject to a loss of interest of between 90 and 365 days depending on how much longer the account has left to run. The account is operated by post but you can apply by phone.
For those still looking for a home for this year's ISA allowance the best long term fixes come from Northern Rock and Skipton Building Society which both pay 4.5% for five years and Halifax, Cheshire Building Society and Derbyshire Building Society which are paying 4.4%
Check the full range of inflation busting accounts here.
There are limits to how much you can invest in any tax year. For 2011/12, the limit is £10,680. Of that, the maximum you can invest in cash is £5,340 and the balance of £5,340 can be invested in shares (individual company shares or investment funds). If you don’t take the cash ISA allowance, you can invest up to £10,680 into a stocks and shares ISA.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.