November Savings Round Up

29/10/2018

Each month, James writes a column for Around Town Magazine, which goes out to 50,000 homes and businesses in Essex.  His November column is reproduced here:

What does the Autumn Budget mean for savers?

The Chancellor of the Exchequer, Philip Hammond, announced his budget on Monday 29th October.  Usually budgets are at 12 noon on a Wednesday, so the 3.30pm timing on a Monday has caused a little furore!  The change was due to the Chancellor wanting to pull forward the timing, to avoid clashing with the final month of Brexit negotiations in November. Initially it was scheduled in for Wednesday 31st October – until aides pointed out this was Halloween!

Fortunately for savers, there weren’t any tricks, but it was a budget short on treats also.  There were no headline announcements on savings but there was some good news buried in the 102 pages of budget detail. 

The treats:

• Premium Bonds – there were two surprise changes. Firstly, they have had their minimum investment reduced from £100 to £25.  Secondly, they can now be purchased by people other than parents and grandparents for children under 16.  Given the prize pool is paying an attractive 1.40% and over £75bn are held in them, they are hugely popular with UK savers.
• National Savings & Investments – earlier in 2018, it was announced that government backed NS&I was to have a reduced funding target of £6bn, with a range of £3bn - £9bn. In essence, the range gives NS&I flexibility but the reduction to £6bn of net new savings was unwelcome.  Given that NS&I have actually taken between £11bn and £18bn in the previous three years, £6bn is a significant reduction.  However, the budget has raised this to £9bn with a range of £6 – 12bn.  This is good news as it reduces the likelihood of further interest rate reductions from NS&I.
• Personal tax allowances increase – a manifesto commitment from the Conservatives was to raise the tax free personal allowance to £12,500 and the 40% higher tax rate to £50,000 by 2020. This is going to happen a year earlier than planned and come in to effect in April 2019.  This is good news generally but particularly relevant for savers who go over their personal savings allowance, the amount of savings interest they can earn without paying tax (£1,000 for basic rate savers and £500 for higher rate).
• Junior ISAs – the limit for JISA’s will rise to £4,368 (from £4,260) with effect from April 2019.

The tricks:

• ISA allowances – there were no changes to the ISA allowance which remains at £20,000. This was somewhat expected given it had risen strongly from the £15,240 in 2016/17 tax year but effectively is a tax rise as more people will go over their allowance – indeed the government is forecasting an extra £5m a year of tax revenue as a result.
• ISA simplification – with seven different types of ISA available, there was hope that ISAs might be simplified but sadly there were no changes to reduce the number of them or simplify what is available.

In summary, it was a quiet budget for savers with some small areas of good news and limited bad news.

Nottingham Building Society launches best easy access account since 2015

Last month we wrote about the new bank from Goldman Sachs called Marcus, which caused a stir with its new savings account paying 1.50% and attracting over 50,000 savers in its first 10 days.  However, it’s been quickly topped by Nottingham Building Society who have launched an internet based eSaver account paying 1.55%.

The account can be opened with a minimum balance of £1,000 from aged 16 and upwards and allows unlimited withdrawals. It’s maximum balance of £250,000 is unlikely to be an issue for most savers too!  It’s internet access and lack of restrictions is likely to make it hugely popular.

Nottingham is the 8th largest building society in the UK with 60 branches.  Given it has a deposits of around £3bn, which is smaller than challenger banks like Charter Savings, Paragon and Shawbrook, it is unlikely that this account will be available for long so definitely one to move quickly on.

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Billericay Christmas Market

We will be at the Billericay Christmas market in Billericay High Street on Sunday 2nd December.  If you have a burning savings question, want to win some fantastic prizes or just want to grab some Savings Guru giveaways, pop along and say hi!

What are the best rates currently?

The market can move quickly, so we always recommend that you check our website for the latest rates.  At time of going to print, our best personal savings rates are: