West Brom ups rate on online Isa
West Brom Building Society has provided a welcome boost for savers looking to shield money away from the tax man by upping the rate on its online cash Isa to a market-leading 1.55%.
Its WeBSaveR Limited Access Isa will now pay interest at 1.55%, up from 1.4%, with the change applying to new customers and those who have already opened the account since the beginning of the new tax year.
The account is online only and requires an initial investment of £1,000. Transfers are also accepted from other providers up to a maximum of £250,000, though you will only be able to make three withdrawals a year without being penalised, with the interest rate dropping to just 0.75% if you do so.
Rates on the rise
With the beginning of the new tax year, West Brom isn't the only provider to try to attract new customers with favourable rates.
From Friday 10 April, Skipton Building Society's limited edition cash Isa will pay 1.6%, which will beat the new West Brom rate. Transfers in are allowed and the account can be opened with just £1 and withdrawals are allowed. It won't hang around long so move quickly if you want to open one.
Nationwide has launched a regular saver Isa that will allow £1,270 a month to enter the account at a rate of 2%, while Leeds Building Society bumped its two-year fixed Isa rate to 2.1% on balances more than £15,000, and its three-year comes with a 2.2% rate on balances above £100.
Responding to the announcement, Kevin Mountford, head of banking at MoneySuperMarket said: "We are beginning to see Isa rates increasing, and new products entering the market as we start the new tax year. It really could be a case of the early bird catches the worm and it might pay for savers to take advantage of the rates on offer now.
"The increase in rate from The West Brom coupled with Nationwide Building Society launching a regular saver ISA offering a 2.0% rate which allows up to £1,270 per month to enter the account, are positive pieces of news for savers."
Savers can now deposit up to £15,240 in an Isa for the 2015/16 tax year.
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.