New tax year
Are you losing out on interest on your ISA? Save early in a cash ISA and you could earn over £125 extra interest
The new tax year started on Friday 6 April 2012, meaning you get a new annual ISA allowance. Although you will have the rest of the year to use your ISA allowance, there could be an advantage in opening an ISA sooner rather than later. We estimate you can earn more than £125 extra interest by saving in a cash ISA early in the tax year1. We’ve worked this out by comparing the interest earned when saving the full cash ISA allowance on the first day of the tax-year against doing so on just the last day of the tax-year.
Economic conditions continue to be difficult and we appreciate that not many people will be able to save their full ISA allowance in April. Our real message is therefore that people should consider saving a little but often throughout the financial year, earning interest along the way. For example, saving £50 per month in a cash ISA could add up to £3,200 after five years2, a good nest egg in many people’s standards.
Watch our video, hosted by money expert, Michelle Slade, and Nationwide's head of savings, Richard Marriott, to find out how you can get more from your ISA.
ISAs explained - how much can you save in an ISA?
We know it can be difficult for people to save so it’s important to use an ISA when you do, as they are tax efficient. In the new tax-year which started on 6 April 2012, your maximum annual allowance is £11,280, of which you can save any amount up to £5,640 in a cash ISA, with the remainder in a stocks and shares ISA, or you can invest your entire ISA allowance in a stocks and shares ISA.
Why you may want to consider a stocks and shares ISA
With interest rates at an all time low, savers want to make more of their money. Using a stocks and shares ISA is the only way you can use your full tax-efficient annual ISA allowance and here are several good reasons why you should consider investing in one:
- Potential for higher returns when compared to a traditional savings account
- Could protect against the effect of inflation, if you are prepared to combine investing and saving
- Protection from capital gains tax on any growth made
- Save time on your tax return as you don’t have to declare any investments held in a stocks and shares ISA
- Investing £50 per month could add up to £4,200 after five years3
Stocks and shares ISAs invest in assets that can fall as well as rise and you may get back less than you originally invested. As long as you are comfortable investing for five years or more and the increased risk associated with investments, you can invest from just £20 per fund into a range of specially selected funds from some of the UK's leading fund managers. The funds are selected by Nationwide and provided through Legal & General.
Cash ISA transfers
Remember it is possible to transfer cash ISA money built up between providers. For example, Nationwide offers a range of cash ISAs that allow transfers from other providers, while also promising that it will pay interest on the date it receives the transfer application (provided funds are free to move and not subject to a notice period) – a move that has already benefitted savers £1.6 million in the past year4.
We do not currently accept transfer-ins for stocks and shares ISAs.
More information on ISAs
Compare our ISA range
If you would like advice on our stocks and shares ISA range, make an appointment with a Senior Financial Consultant at a Nationwide branch, who can help you create a portfolio that matches your aspirations while taking into consideration your attitude to risk. Alternatively, you can read more on investments here.
1 Estimate. Calculation assumptions:
- Cash ISA subscribers 2010/11: 11,926,000
- Cash ISA subscription limit: £5,640 (2012/13 allowance)
- Average cash ISA interest rate (industry): 2.27% (CACI, December 2011)
- Those saving the full cash ISA allowance on the first day of the tax year would collectively earn £1,526,861,928 compared to £4,183,183 if saving on the last day of the tax year. This equates to a difference of around £128 per person
2 Depending on interest rate earned over those five years
3 Example: over 60 months, £25 per month invested in the M&G Strategic Corporate Bond fund and £25 per month invested in the First State Global Emerging Markets Leaders fund. Assumptions: investments in pound sterling, bid-bid pricing, includes charges levied by the fund managers. Source: Financial Express. Past performance is not a guide to future performance.
4 Savings promises