Money experts have warned this is your last chance to double your tax-free ISA savings (Image: Getty)
As speculation continues to swirl around the future of Cash ISAs, households are being urged to max out their tax-free savings this year no matter what.
Chancellor Rachel Reeves has repeatedly refused to rule out slashing Cash limits, which would lower the amount you could save without being taxed on the interest, with some finance experts suggesting that the current £20,000 limit could be reduced to just £4,000.
While confirmation of any Cash changes is not likely to be announced until March, it’s still the case that current Cash limits will be in place until at least the end of this tax year at the end of March.
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It means that savers only have weeks left to make the most of the £20,000 Cash limits in place right now and maximise savings without paying tax.
And if you use your partner’s ISA allowance, you could increase the amount you’re able to shield from tax before the deadline.
Matthew Jenkin, a Which? savings expert, said: “ISA season is here – make the most of your allowance
“ISA rates tend to rise between January and April as providers compete for savers’ cash. If you’ve used your £20,000 allowance but your partner hasn’t, you can pay into their ISA instead, doubling your tax-free savings.
“You can also put up to £9,000 into a Junior ISA for your child. A family of four could save £58,000 a year tax-free across different ISA accounts just by doing this.”
Currently, individuals can earn £1,000 in interest on their savings before they have to pay tax to on it. For a basic rate taxpayer, every £1 over £1,000 would be taxed at 20%. So if you earned under £50,000 in a year, and made £1,200 of interest on savings, you would owe 20% of £200, or £40.
But if you had savings in an ISA, any money in the ISA would not be taxed, even if you earned more than your Personal Allowance, because ISAs are tax protected and not counted against your savings allowance.
If you earn above £50,270, you can only earn £500 in interest in a year, and if you earn £125,000, you can’t have any savings without tax. So ISAs become especially important for higher earners as well as those with lots of savings.