Savers have been struggling with low rates for years, something which has been hitting pensioners hard too, but with Budget 2014 just over, savers can breathe a little easier with new announcements that will benefit them.
We knew savings was going to be the big issue as Chancellor George Osbourne announced right at the beginning that "Support for savers is at the centre of this Budget", but let's take a look at what this really means for you.
Let's start with ISAs. The Chancellor announced that he will be merging both stocks and shares and cash ISAs into one New ISA – or NISA – with an annual limit of £15,000. This will be coming into force on July 1 and savers will be able to transfer any existing stocks and shares ISAs into cash ones, and vice versa. This will particularly benefit those savers who have a good sum of money to invest but don't want to enter into the risk of stocks and shares.
The Junior ISA limit is also being increased, rising to £4,000 in 2014-15.
To help pensioners escape the awful interest rates they are currently experiencing, a new Pensioner Bond from NS&I will be available from January 2015 for anyone over the age of 65. Up to £10,000 can be saved and although the rates will be set in the autumn, the Chancellor said assumptions were that rates will be 2.8% for a one-year bond and 4% for a three-year.
The Chancellor has also abolished the 10 pence starting rate for tax on savings which will help low-income savers. From April 2015 the starting rate of savings income tax will become 0% and the amount of savings income that the rate applies to will increase from £2,880 to £5,000. This will mean that anyone with a total income (including wage, pension, benefits and savings income) of less than £15,500 – your personal allowance at the 2015 £10,500 rate, plus £5000 - will not pay any tax on their savings, however, you must register for this by filling out an R40 form.
Things are looking up a little for savers, despite them still eagerly awaiting a rate rise, as Sylvia Waycot, editor at Moneyfacts.co.uk, comments: "George Osborne's announcement that ISAs are to be inter-transferable is terrific. The inflexibility of not being able to move from stocks and shares to cash or being able to put the entire allowance into cash ISAs has been a bugbear for industry and consumers alike. Frustration has long existed at the unfairness of a system that penalises those who are risk averse and prefer the safe haven of a savings account.
"This latest announcement means that savers are able to invest their total ISA allowance in a form of savings that makes them feel comfortable. All we need to add icing to the cake is for ISA rates to truly reflect savers' ambitions. Sadly that is less likely to happen."
But while we are waiting you can still make the most of your savings and search for the best paying accounts. Ensure you use up this year's ISA allowance before you lose it, and if you don't mind locking your money away then there are some competitive rates available.
Find a home for your 2013-14 cash ISA allowance
Find the best savings rates with our best buys or savings search
Compare the best available stocks and shares ISAs
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