LONDON, March 26, 2013 /PRNewswire/ --
For savings balances of £50,000:
- 45 % tax payers could be £ 996 better off in just one year with an offset versus an instant access savings account*
- 40% tax payers could be £ 969 better off in just one year with an offset versus an instant access savings account*
- 20% tax payers could be £ 860 better off in just one year with an offset versus an instant access savings account*
In the current environment of low interest rates everyone is hunting for the best home for their hard earned savings, especially high rate tax payers.
For those wanting easy access to their savings an instant access account is a must, but with the Bank of England Base Rate likely to remain low for the foreseeable future, first direct argues that savers, especially high rate tax payers, with a large savings balance can get more benefit from offsetting their savings against their mortgage instead.first direct, which supplied nearly two fifths of all new offset mortgages in 2012, has compiled a table based on £50,000 in savings. The table approximately illustrates the benefit in just one year of offsetting savings versus depositing them in an instant access savings account*.
Average Instant Instant Access Access Saver - Savings interest Saving by rate on offsetting Benefit of after GBP50,000 GBP50,000 offsetting tax** in one for one savings Income Tax Bracket (AER) year (a) Offset rate year (b) (b-a) 45% (GBP151,000+ from 6/04/13) 0.60% GBP299.75 2.59% GBP1,296 GBP996.25 40% (GBP34,371 - GBP150,000) 0.65% GBP327.00 2.59% GBP1,296 GBP969.00 20% (up to GBP34,370) 0.87% GBP436.00 2.59% GBP1,296 GBP860.00Andy Forbes, Head of Retail Products at first direct commented: "For those people who have a mortgage and savings, offsetting is a fantastic option. They can benefit from a higher equivalent rate of interest on their savings, pay less interest on their mortgage as well as the added benefit of having access to their savings at any time."