ISA Watch: Cheshire BS ISA Saver
April marks the beginning of the 2013/14 tax year and the freshly increased tax allowances for ISAs will come into effect – up to £11,520 from £11,280 overall, of which £5,760 can go into a cash ISA.
If you’re looking for an ISA for your new allowance, the Cheshire Building Society ISA is worth considering.
The ISA Saver (Issue 2), which is an instant-access ISA, offers 2.3% with a minimum initial deposit of £1,000. The interest is paid yearly, but you will only receive 2.3% on accounts holding more than £1,000 – if the balance falls below that, the interest rate drops to 0.25%.
The rate includes a 1.8% bonus that lasts until 30 October 2014 – which, in the grand scheme of things, is not too bad as most bonus periods only last 12 months. Withdrawals are also allowed from the account.
Cheshire Building Society allows you to open the account online, but the operation of the account must be done by post. For more details visit thecheshire.co.uk or contact 0808 144 3880.
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.
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.