A spring chill for savers
Inflation figures released today show the Consumer Prices Index (CPI) rose during March, from 3.4% to 3.5%.
To beat inflation, a basic rate taxpayer at 20% needs to find a savings account paying 4.38% per annum, while a higher rate taxpayer at 40% needs to find an account paying at least 5.83%.
Today there is a choice of 50 standard savings accounts that taxpayers can choose from to negate the impact of tax and inflation.
The impact of inflation on savings means that £10,000 invested five years ago, allowing for average interest and tax at 20%, would have the spending power of just £9,204
Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said:
“CPI is on the rise again, and savers all over the country must be heaving one big sigh of frustration.
“This disappointing rise means that there are now 50 standard savings accounts that negate the effects of inflation and the taxman’s cut. The silver lining is that time last year there were only 25.
“There are 45 ISAs that beat inflation, obviously helped by their tax advantage, though they are limited by the amount that can be invested (£5,640 per annum). By comparison, there are then five non-ISA accounts that beat inflation, all of which are fixed rate bonds.“Today’s rate of inflation means hundreds of thousands of savers need an account paying a hefty 4.38% before they earn a real rate of return on their savings. Yet, the average no notice savings account only pays a paltry 1.05% showing the size of the problem many still face.”
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
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