Easy to fall into tax now.

2010

£45k in Charter`s easy access 2.25% would give you £1,012 interest as an example.
£25k in a 1yr fix £1000 interest.

Bigwheels1111

What’s the issue, 1 year ago you go 0.50% £225 on 45k.
now 1 year fixed at 4% £1800, tax on £800 is £160.
So £1640 after tax. Just over  7 times the amount after tax.

Daliah

You'll still get more interest than before.

Though whether you pay tax on it or not, your cash savings are losing purchasing power as inflation is a multiple of the best gross savings rates.

masonic

This is a problem I'll be glad to have. Much better than my unwrapped savings not generating £1k in interest. Cash ISAs might superficially seem the answer, but often give you no better net return than unwrapped.

Though I agree with Daliah, having a -6% real return that's taxed is no fun.

Expotter

Cash ISA rates have been improving, if you've used your allowance, a 3.6% fixed 1 year ISA is equivalent to 4.5% before tax at 20%, which is actually higher than the best non ISA 1 year fixed at the moment. For easy access the 2.25% Coventry ISA (from 7/10) is equivalent to 2.81%, so again much better than non ISA easy access. And they're even better if you pay higher rate of tax.

TheBanker

It's possible the thresholds will be increased in the November budget I suppose.

Daliah

TheBanker said:

It's possible the thresholds will be increased in the November budget I suppose.

Keep on dreaming. 

Choirgrl

I didn’t see the OP saying it was a problem. What it might mean for people is:
- Needing to keep in mind / plan for there being some tax to pay.
- A cash ISA potentially being useful, in a way which it wouldn’t have been previously.

Dazed_and_C0nfused

TheBanker said:

It's possible the thresholds will be increased in the November budget I suppose.

They've already increased the 40% threshold to infinity (and beyond!!)

Rich1976

Daliah said:

You'll still get more interest than before.

Though whether you pay tax on it or not, your cash savings are losing purchasing power as inflation is a multiple of the best gross savings rates.

Though people need savings for all sorts of things regardless.

Albermarle

Rich1976 said:

Daliah said:

You'll still get more interest than before.

Though whether you pay tax on it or not, your cash savings are losing purchasing power as inflation is a multiple of the best gross savings rates.

Though people need savings for all sorts of things regardless.

There are two seperate issues.

Of course having savings is better than not having savings.

However if you are the type to take an interest in your overall financial position, (as many posters on here do) then you will be aware that the value/spending power of any savings you have is going down. 
Although not as much as the value of investments has gone down.........