Savings

Most of us do some sort of savings. While the interest being offered on cash savings accounts is very low, it will be at least 20% more if your money is building up free of tax. Those who are earning £6000 or so can fill out a simple form to ensure tax is not deducted. For most of us, however, avoiding tax on our savings comes down to putting the money in a Cash ISA (Individual Savings Account). Cash ISAs are easy to arrange. Each individual can save up to £5,100.00 in a Cash ISA in this Tax Year (2010/2011). This is expected to increase in the new Tax Year to £5,340.00.

While looking at your cash savings to avoid having to pay tax, it is a good time to do an equally important action. Find out what interest you are being paid! Usually you will need to ask. Once you know you can then do a quick comparison (moneyfacts.co.uk or moneysupermarket.com) to see how much better you could do elsewhere. At the very least you can find out from your present bank or building society whether they have a higher interest rate they can offer you.