Like love, stealth taxation is all around us. Those oh-so-reluctantly given public-sector pay rises will be in part repaid by increased tax, with allowances frozen and many more being pushed into the 40% (or for some, just the 20%) tax band. With interest rates at 1%, you wouldn’t have been likely to pay tax on your interest unless you had £100k or more in a bank deposit account. At 4 or 5%, that comes down to as little as £20k, £10k if you’re a high rate taxpayer (when you’re only allowed £500 of interest tax-free) after which those rates aren’t in reality quite as good as they sound. Which makes Premium Bonds and their tax-free prizes seem a still-better bet. As previously trailed, an awful lot of those who’ll have to pay some tax won’t have a clue that they should and almost certainly won’t be completing a tax return at the moment. Which will be a dilemma, not just for them, but for the taxman, too.
“The true impact of inflation on cash savings and pensions”
Leaving your money in the bank or building society has always meant that its ‘real value’ after inflation will go down. Although rates go up to, supposedly, control inflation, any chart you look at will show that, apart from a few very short-term blips (N Lamont, I’m looking at you) they are never more than inflation.
