Last month, on February 6th, we saw a 0.25% cut to the Bank of England base rate.

Savings rates are proving resilient!

Normally, that’s bad news for savers since interest rates on savings accounts tend to follow suit. But so far this year, the best savings rates have held up surprisingly well. In fact, many accounts are not only offering rates higher than the current base rate of 4.50% but also keeping pace with the rising cost of living (inflation), which currently stands at 3%.

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So what does this mean for savers?

Well, it might not be as bad as you think!

The fact is that some of the longer-term bonds and ISAs are actually paying higher rates now, compared to the beginning of the year.

Back in early January, the best 5-year bond available paid 4.50% AER, but today, JN Bank, Birmingham Bank and Close Brothers Savings are all offering 4.55% AER. Similarly, the top 5-year cash ISA rate has risen from 4.18% at the start of the year to 4.30% now.

One of the key reasons for this is inflation, which remains stubbornly above the Bank of England’s 2% target. As a result, interest rates are expected to stay higher for longer than previously anticipated. Good news for savers!

Even some of the top variable rates, whilst a little lower than they were in January have not fallen by as much as the cut in the base rate. At the start of the year the best unrestricted easy access account, offered by Gatehouse Bank, paid 4.75%. Today, GB Bank is offering 4.60% AER. And that Gatehouse Bank account, although it has since been withdrawn from sale, those who opened it before it was closed are still benefiting from that 4.75% rate.

For those who can limit their withdrawals, even better rates are available. Monument Bank’s Limited Access Saver pays 4.75% AER, allowing three penalty-free withdrawals per year—though you’ll need at least £25,000 to open the account. If you have a smaller balance, Vida Savings Defined Access Issue 1 offers 4.65% AER, allowing four penalty-free withdrawals a year. Any additional withdrawals will see the rate drop to 2.50% for the rest of the year.

Cash ISAs continue to provide a valuable tax-free savings option. There’s been speculation that the cash ISA allowance could be reduced—or even scrapped altogether. However, despite the ongoing debate, it has been reported that Chancellor Rachel Reeves has confirmed there will be no changes to cash ISA rules in the upcoming Spring Forecast on March 26th – but that doesn’t mean the cash ISA allowance is safe!

The key takeaway? Savers still have plenty of opportunities to make their money work harder. It’s worth checking what you’re currently earning and switching if you can get a better deal. And if you can afford to lock away some of your savings, you could protect yourself from further rate cuts while keeping up with inflation.

Take a look at our unbiased and whole of market best buy tables to see if you could do better!

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Investment returns are not guaranteed, and you may get back less than you originally invested. 

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate tax advice.

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Question: I love cash ISAs and hope they stick around. I’ll be receiving a lump sum soon and want to put some of it into next year’s £20,000 ISA allowance. I prefer cash ISAs but need some flexibility since my rental income isn’t always steady. Can I split my funds between a fixed-rate ISA and an easy access ISA as there are times that my properties are empty, so I might need access to some cash? 

I’m a fan of cash ISAs too! So, I’m worried that there’s been a lot of speculation recently that the cash ISA allowance is to be either scrapped or at the very least restricted – some are saying to as little as £4,000 a year. With cash ISAs remaining as one of the best ways to earn tax-free interest for savers, I hope that these rumours won’t come to fruition, but we’ll just have to wait and see.

Now, onto your question. Thanks to rule changes in April 2024, you should now be able to split your £20,000 ISA allowance into several cash ISAs within the same tax year. That means you could open both a fixed-rate cash ISA and an easy-access cash ISA, as long as you don’t exceed your total annual allowance. However, it might not be as simple as you’d hope!

A fixed-rate ISA usually offers a better interest rate in return for locking your money away for the chosen term — ideal if you don’t need access to those funds for a while. Plus, it protects you from any future rate cuts that may happen. In contrast, an easy-access ISA gives you the flexibility to withdraw funds if you need them for rental gaps or unexpected expenses, although the interest rate is variable and could be cut if interest rates fall over time, as is expected.

However, while the updated rules now allow this mix-and-match approach, not all providers have adopted them in practice.

Before the 2024 rule change, you could only pay into one of each ISA type per tax year—so, for example, one cash ISA and one stocks and shares ISA. There was an exception called the ‘portfolio ISA’ rule, which allowed multiple cash ISAs with the same provider in a single tax year, but only a handful of providers, such as Paragon, Aldermore, Charter Savings Bank, Nationwide and Ford Money, offered this option.

With the new rules, you might assume you can now open multiple cash ISAs with different providers or the same provider within a single tax year. But here’s the tricky part - ISA providers aren’t required to follow the new rules. Most now allow you to open another cash ISA even if you’ve already funded one with a different provider in the same tax year. However, this doesn’t necessarily mean they allow multiple cash ISAs under one roof.

If you’re after the best rates for both fixed and easy-access ISAs, chances are they won’t be from the same provider anyway. So, to make the most of your allowance; it’s worth picking the best rates available rather than worrying about whether one provider allows multiple ISAs.

And be aware that you should always check the small print on easy-access ISAs. Some have short-term bonuses that boost the rate initially but drop after a few months. Others limit the number of withdrawals you can make before penalties apply.

Another key point - if you expect to dip into your ISA savings, check whether the ISA is flexible. With a flexible ISA, you can withdraw money and put it back within the same tax year without affecting your allowance. If it’s not flexible, any money you take out still counts toward your annual limit when you replace it.

For example, if you put £10,000 into your cash ISAs during the 2024 to 2025 tax year but then take out £3,000, the amount you can put in during the same tax year is £13,000 if your ISA is flexible (the remaining allowance of £10,000 plus the £3,000 you took out). But if your ISA is not flexible, you can add just £10,000 (just the remaining allowance).

Whilst in theory the new rules should make opening ISAs simpler than ever before, the bottom line is that whilst things should be more flexible now, inevitably this isn’t necessarily the case, so you need to ask your existing and potential ISA providers about which of the rules they have adopted or are looking to adopt. 

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate tax advice. 

The accounts mentioned in this article are accurate and correct as at the time of writing.

The fight for the future of the cash ISA continues as one of Britain’s biggest building society has waded into a row over whether the government should cut tax breaks on cash ISA's, arguing such a move would reduce the availability of mortgages for first-time buyers.

As covered in our previous article on the cash ISA threat, Rachel Reeves is being lobbied by City firms to scale back or remove tax breaks on the popular cash ISA's. They are putting pressure on Reeves to make these changes so that more focus is put on the riskier practice of investing in the stock market, which they say would boost economic growth and could deliver higher returns to individuals over the long term, although as with any investment that is not guaranteed.  

Richard Fearon, CEO of Leeds Building Society, criticised the increasing push from certain City brokers and fund managers to cap cash ISAs in an effort to steer savers toward stocks and shares. He warned that lowering the £20,000 annual cash ISA limit would not only be unpopular among customers but could also lead to higher mortgage rates.

“It’s naïve at best, or deliberate misinformation at worst, for fund managers to say money saved in cash ISA's is dormant,” he said. “We use it to fuel our mortgage lending. If you significantly reduce that funding, mortgage rates would become more expensive for borrowers.”

A survey to Leeds Building Society customers last year found that only 7 per cent were interested in opening stocks and shares ISAs in 2024. It’s clear that many people are not interested in the more risky stocks and shares ISA over the more secure cash ISA, despite what big city firms want.

What is an ISA?

An ISA, or ‘Individual Savings Account’, is a scheme that allows anybody to hold cash, shares and unit trusts free of tax on dividends, interest, and capital gains. Essentially, it’s a savings account that you don’t pay tax on.  

A cash ISA is a tax-free savings account that allows people to save cash without incurring income tax on interest. They have become more popular over the past two years due to rising interest rates increasing the competitiveness of savings products.  

A stocks and shares ISA is a tax-efficient account that allows you to invest in shares, funds, bonds, and other assets while being sheltered from income and capital gains tax. 

You can save up to £20,000 each tax year and receive tax-free interest payments, so when the value of your ISA increases, you get to keep all of it tax-free*.  

While there is a £20,000 allowance in place for how much you can put in a year, there is not a cap on how much you can accumulate in an ISA over a lifetime.  

When choosing a style of investment to suit your needs, you may want to consider how long you plan to invest for and how much you would like your money to grow. It is also important to understand what movement in value you may or may not be happy with and any potential losses that may happen. That is why getting professional advice can be important for understanding your objectives and options.

If you want to find out more, why not give us a call on 0333 323 9065 or book a free non-committal initial consultation with one of our chartered advisers to see how we can help. 

*Source: Gov.uk

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

Investment returns are not guaranteed, and you may get back less than you originally invested.  Past performance is not a guide to future returns. 

Planning for retirement requires careful consideration of the best savings vehicles available, and two of the most popular options in the UK are pensions and ISAs (Individual Savings Accounts). While both offer tax-efficient ways to grow wealth, they serve different purposes and come with distinct advantages and limitations. A well-rounded retirement strategy may involve using both, depending on individual financial goals, tax considerations, and evolving regulations.

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The role of pensions in retirement planning

Pensions are designed primarily for long-term retirement savings, offering significant tax advantages that make them an attractive option. One of the biggest benefits is the tax relief on contributions—money paid into a pension receives tax relief at an individual’s marginal tax rate, effectively reducing the amount of tax paid on earnings. For higher or additional-rate taxpayers, this makes pensions particularly valuable, as contributions can benefit from 40% or even 45% tax relief, depending on income levels.

Additionally, pensions provide tax-free investment growth, allowing savings to accumulate over time without being eroded by capital gains tax or dividend tax. When it comes to withdrawing funds, 25% of a pension pot can be taken as a tax-free lump sum, while the remaining balance is subject to income tax. The trade-off for these benefits is that pension savings are locked in until at least age 55 (rising to 57 in 2028), making them less accessible in comparison to ISAs.

The flexibility of ISAs

ISAs, on the other hand, offer tax-free growth and withdrawals, making them an excellent complement to pensions in a retirement strategy. While contributions do not receive tax relief, the ability to access funds at any time without penalty makes ISAs more versatile. This flexibility can be particularly useful for those who may need to draw on savings before retirement or wish to supplement their pension income without triggering additional tax liabilities. ISAs have a limit of £20,000 per individual per tax year and this can be split across cash and/or stocks and shares.

Cash ISAs allow savers to earn tax-free interest, while Stocks & Shares ISAs provide the potential for investment growth with no capital gains or dividend tax on returns. This makes ISAs an attractive choice for those who want to retain control over their savings without the restrictions of a pension. However, recent discussions about potential changes to the Cash ISA framework have raised concerns about its long-term benefits, making it all the more important for savers to stay informed about policy updates.

The changing landscape of pensions and inheritance tax

One of the most significant changes being proposed for pensions  is the planned inclusion of pension funds within the scope of inheritance tax (IHT) from 2027. Historically, pensions have been an efficient way to pass wealth down to future generations, as they have typically fallen outside of an individual’s estate for IHT purposes. This has led many financial advisers to recommend using non-pension savings first in retirement, preserving pension wealth to be inherited tax-free.

However, with the proposed new rule changes, pensions may no longer enjoy this exemption, potentially making them less favourable for wealth transfer. This shift may encourage retirees to draw down on their pensions earlier rather than leaving them untouched, making strategic planning even more essential. Individuals should review their estate planning strategies in light of these proposed changes to ensure they optimise tax efficiency while securing their financial future.

Balancing pensions and ISAs for a stronger retirement plan

Given the unique advantages of both pensions and ISAs, a balanced approach can help individuals make the most of their retirement savings. Pensions remain a powerful tool for long-term wealth accumulation due to tax relief and employer contributions, but they have some limitations on access and flexibility and could soon be subject to inheritance tax. ISAs, while not offering tax relief on contributions, provide tax-free growth and withdrawals, making them an excellent complement for early or flexible access to savings – but are limited to £20,000 contribution per tax year.

Younger savers may prioritise pensions to take full advantage of employer contributions and tax relief, ensuring they build a solid foundation for the future. Meanwhile, those approaching retirement may benefit from shifting some focus to ISAs, allowing for accessible savings that can be drawn upon without incurring additional tax burdens. Given the proposed changes to pension inheritance tax, retirees may also need to rethink how they draw down their savings, potentially using pensions earlier than previously advised.

With tax laws and regulations evolving, seeking professional financial advice is crucial to navigating the complexities of retirement planning. A tailored strategy that considers tax efficiency, investment growth, attitude to risk, and changing policies can make a significant difference in long-term financial security. By carefully balancing contributions between pensions and ISAs, individuals can build a more resilient retirement portfolio that aligns with their goals and adapts to the shifting financial landscape.

We’re currently offering anyone with £100,000 or more in pensions, savings or investments  a free initial financial review worth £500. If you’d like to learn more, get in touch for an initial consultation to see how we can help.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate tax planning.

Investment returns are not guaranteed, and you may get back less than you originally invested. Past performance is not a guide to future returns.

The information contained within this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.

National Savings & Investments (NS&I) has announced changes to some of its savings rates, with a mix of good and bad news for customers. While some rates are being cut, there is also a slight boost for those with the cash ISA.

The bad news is that from 5th March 2025, NS&I will lower the interest rates on its Direct Saver and Income Bonds easy access accounts. Direct Saver will drop from 3.50% to 3.30% AER, while Income Bonds will see a reduction from 3.44% monthly (3.49% AER) to 3.26% monthly (3.30% AER). Additionally, the prize fund rate on Premium Bonds will decrease to 3.80% from the April 2025 draw.

However, there is some positive news. Effective immediately, the Direct ISA rate has increased from 3.00% to 3.50% for both new and existing customers. While this is a welcome boost, it is worth noting that better rates are available elsewhere – and you are not able to transfer in previous ISA allowances.

Why is NS&I cutting rates now?  

One key factor behind the cuts is likely to be the recent base rate reduction of 0.25% in early February, from 4.75% to 4.50%.

But it could also be that NS&I is already on track to meet its net financing target for the tax year – the amount of money it needs to raise each year.  

In the Spring Budget of March 2024, the UK government set NS&I’s net financing target for the 2024-25 financial year at £9 billion, with a leeway of plus or minus £4 billion.  

This is quite a range and as of the second quarter of the 2024/25 tax year, it had raised £3.3 billion. While this is within the target range, it is slightly below the ideal figure, making the decision to cut rates even more disappointing.

Are Premium Bonds still worth hanging on to?

Premium Bonds remain a popular choice, especially for taxpayers, as winnings are tax-free. Rather than paying interest, Premium Bonds give holders the chance to win prizes ranging from £25 to £1 million each month. The odds of winning remain at 22,000 to 1, but in order to keep the odds the same, NS&I has increased the number of £25 prizes while reducing some of the larger payouts. However, the two £1 million jackpots will still be available each month.

Despite the rate cut, many savers are likely to keep their Premium Bonds because of the ‘what-if’ factor – the excitement of potentially winning big.

And for those who pay tax on savings interest, Premium Bonds could offer particularly competitive returns. For example, a tax-free win of the new prize fund interest rate of 3.80% is equivalent to a 4.75% return for basic-rate taxpayers, 6.33% for higher-rate taxpayers, and 6.91% for additional-rate taxpayers in a taxable savings account. No savings accounts currently offer anything close to these rates for higher and additional taxpayers.

Of course the risk is that you win either less than this or even nothing at all, although the latter is highly unlikely if you have a larger holding in Premium Bonds.

How do the new easy access and ISA rates compare?  

For those looking for better easy access savings rates, alternatives exist. Some banks and building societies are currently offering rates as high as 4.57% AER on accounts with no restrictions. Others, like Monument Bank’s Limited Access Saver, is offering 4.75% AER on £25,000 plus, although only three penalty free withdrawals can be made per year and it must be opened via the bank’s mobile banking app. If you are looking for monthly interest, this account allows you to choose this option paying a rate of 4.65% gross monthly.  

Kent Reliance offers an unlimited access account that can be opened in branch or online paying 4.56% AER/4.47% monthly.  

There are plenty of easy access cash ISAs paying more too.  

Take a look at our best buy tables to see what else is on offer.

Why some still choose to stay with NS&I

With better rates available, some savers may consider moving their money to earn more. However, NS&I remains a trusted option due to its government backing. Unlike other banks and building societies, which are protected by the Financial Services Compensation Scheme (FSCS) up to £85,000 per person per institution, NS&I guarantees 100% security for all savings, no matter the amount. So for short term needs, NS&I can be an obvious and simple option.

But for those with smaller balances or who are willing to spread their savings across multiple institutions paying higher rates, it might not be the best choice.

The rise of the cash savings platforms has also added another option for those with larger amounts of cash.

Think of a cash savings platform like a savings supermarket, where with a single application and log-in, you can pick and choose multiple competitive savings accounts - from easy access to fixed term bonds - and providers at the click of a button. Whilst not whole of market, cash platforms often do offer competitive and some market leading accounts. But the real benefit is that they make it easier to spread your cash, so that it can be better protected by the Financial Services Compensation Scheme (FSCS), whilst earning more.

You can now open, access and switch between multiple competitive savings accounts via a single log-in with the our  Savers Hub, powered by Insignis.  

While NS&I’s rate cuts are disappointing, the appeal of Premium Bonds and the security of being able to deposit very large sums securely remain strong. However, savers looking for better returns should explore alternatives, as the current market offers more competitive rates. 

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The Financial Conduct Authority (FCA) does not regulate cash advice.

The accounts and rates mentioned in this article are accurate and correct as of 27/02/2025.

The financial landscape has shifted dramatically over recent decades, leaving Generation Z (those born between 1997 and 2012) facing a unique set of challenges compared to their parents and grandparents. From soaring house prices to student debt and an increasingly complex job market, young adults today must navigate financial hurdles that previous generations may not have encountered at the same stage of their lives.

At the same time, there is an unprecedented transfer of wealth underway, known as the Great Wealth Transfer (or even Bank of Mum and Dad), with many parents and grandparents holding significant financial assets that could play a vital role in supporting the next generation.

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For parents, the question is no longer just how to leave a financial legacy but also how to equip their children with the knowledge and confidence to manage their money effectively. The right conversations and early financial planning can make all the difference in helping Gen Z establish a strong foundation for their future.

A New Set of Financial Challenges

Every generation faces financial pressures, but Gen Z has grown up in an economic environment where stability can feel increasingly out of reach.

Homeownership, once considered a realistic milestone for young adults in their twenties or early thirties, has become far more difficult to achieve. House prices have surged ahead of wage growth, with deposits requiring years of disciplined saving. For many young people, renting well into adulthood is the only viable option, meaning they have less opportunity to build wealth through property ownership.

Sadly, rental costs have soared in recent years, meaning many young adults are forced into living with their parents for longer than they might ideally like, pushing independence further down the road.

Student debt is another significant burden. While previous generations could attend university with minimal financial strain, tuition fees and the cost of living now leave many graduates starting their careers already saddled with considerable debt. At the same time, traditional career paths are changing. The rise of the gig economy and short-term contracts means that many young workers experience financial instability, making it harder to plan for the future or save consistently.

Beyond these direct challenges, there is also the issue of financial education. Many young people enter adulthood with little understanding of saving, investing, or managing debt, leaving them vulnerable to financial mistakes. The earlier they develop financial literacy, the better positioned they will be to navigate these challenges with confidence.

The Role of Parents in Financial Education and Support

One of the most valuable things parents can do for their children is to normalise conversations about money. Many families shy away from discussing finances, whether due to cultural norms, discomfort, or simply a lack of knowledge about how to approach the topic. However, fostering an open dialogue about money from an early age can set children up for long-term success.

The family dinner table is an ideal place to introduce these discussions. Talking about budgeting, saving, borrowing or even explaining financial decisions in real time helps children develop a natural awareness of financial matters. For younger children, this could be as simple as discussing how pocket money is spent and saved. For teenagers and young adults, conversations might focus on the realities of student loans, credit scores, or the importance of building an emergency fund.

Crucially, these discussions should not be one-off lectures but ongoing conversations that evolve as a child grows. Encouraging Gen Z to ask questions and think critically about money can help them make informed financial decisions rather than relying on trial and error.

The Great Wealth Transfer and Its Impact

While Gen Z faces significant financial pressures, they are also poised to benefit from what is being called the largest wealth transfer in history. Over the coming decades, trillions of pounds are expected to be passed down from the ‘baby boomer’ generation to their children and grandchildren, reshaping the financial landscape.

For families with significant assets, careful planning is essential to ensure that wealth is transferred in a way that is both tax-efficient and beneficial for the next generation. Parents and grandparents should consider whether gifts or inheritance might help their children achieve financial security, such as contributing to a house deposit or assisting with university costs. However, support should be accompanied by financial education and know-how. Without the right knowledge, sudden financial windfalls can be mismanaged or even create unintended dependencies.

This is where financial advice plays a crucial role. Whether navigating inheritance tax (IHT), structuring financial gifts, or setting up trusts, working with a financial adviser can help families manage their wealth in a way that benefits both the current and future generations.

Encouraging Smart Financial Habits Early

While parental support can make a significant difference, it is equally important that young people take ownership of their financial future. Encouraging Gen Z to start investing early can be one of the most impactful steps towards long-term wealth building. The power of compounding means that even small investments made in their twenties can grow significantly over time, providing a strong financial foundation for later life.

Many young adults perceive investing as risky or complicated, often assuming it is only for those with substantial wealth. However, with modern investment platforms making it easier than ever to get started, there has never been a better time for young people to explore their options. Even modest contributions to a stocks and shares ISA or a tax-efficient pension scheme can set them on the path towards financial independence.

Parents can support this by demystifying the investment process, encouraging their children to start early, and, if necessary, introducing them to professional financial advice.  A financial adviser can provide tailored guidance on saving strategies, tax-efficient investment options, and long-term financial planning, helping young investors build confidence and clarity about their financial goals. 

Why Seeking Financial Advice Matters 

For parents, working with a financial adviser can help create a structured plan for passing on wealth while ensuring their children are prepared to handle financial responsibilities. For Gen Z, seeking the right financial advice early can provide clarity on how to budget, save, and invest effectively, setting them up for long-term success. 

At TPO, we help individuals and families build a secure financial future through tailored advice and strategic planning. Whether you are a parent looking to support your children or an adult looking to maximise your wealth, our team is here to provide the expertise you need. 

If you want to take control of your financial future, contact us today to learn how we can help you make informed, confident decisions.  

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The details in this article are for information only and do not constitute individual advice.

The Financial Conduct Authority (FCA) does not regulate tax advice or estate planning.

Investment returns are not guaranteed, and you may get back less than you originally invested. Past performance is not a guide to future returns.

UK inflation unexpectedly jumped to 3% in the 12 months to January 2025, marking a ten-month high and catching many analysts off guard. The rising cost of living is up from 2.5% in December and above analyst’s forecasts of 2.8%.  

The increase has raised fresh concerns about how long the Bank of England (BoE) will need to keep interest rates higher, meaning potentially the pain will be prolonged for borrowers – but could signal better news for savers  

The rise in inflation has been driven by several key factors. Airfares, which typically drop sharply after the holiday season, didn't fall as much as expected, keeping travel costs higher. On top of that, the introduction of VAT on private school fees has pushed up tuition costs, adding to the pressure. Food and non-alcoholic drink prices have also edged up, squeezing household budgets even further. Meanwhile, core inflation, which strips out volatile items like food and energy, has also climbed to 3.7%, and services inflation is now running at 5%. All of this suggests that inflation is proving more stubborn than the BoE might have hoped.

This latest inflation surprise makes the BoE’s monetary policy strategy more complicated. The Bank had been moving toward cutting interest rates this year, particularly given the weak economic growth seen in recent months. But with inflation coming in higher than expected, policymakers may have to hold off on rate cuts for longer to ensure inflation doesn’t start climbing again. Some experts still believe rate cuts are on the way, but this inflation spike could slow things down and force the Bank to take a more cautious approach.

Whilst bad news for borrowers, for cash savers this uncertainty around interest rates has some important implications. If the BoE keeps rates higher for longer, that could be good news for those with savings as banks and building societies may also be slower to cut rates – particularly on fixed term accounts. However, inflation at 3% means that unless you’re earning at least that much interest on your savings, the real value of your money is being eroded over time.

For example, if you have £10,000 in the Lloyds Easy Saver account which is paying just 1.10% AER on balances of between £1 and £25k, after a year the real value of your money would have fallen to £9,816, assuming inflation were to remain at 3%. If you were to move that £10,000 to an account earning 4%, your cash would have actually increased in value, even after the effect of inflation, to £10,097 in real terms.

Check if your savings are keeping ahead of inflation with our inflation calculator below:

Now more than ever, it’s important to make sure your money is working as hard as possible. Shopping around for the best interest rates is key, as banks are still offering a mix of competitive and disappointing deals. Fixed-rate savings accounts might be worth considering if you want to lock in a good rate before any potential cuts in the future. Meanwhile, cash ISAs remain a great way to shield your savings from tax, helping you to maximise your returns.

With inflation still proving unpredictable and interest rates in a state of flux, keeping an eye on the financial landscape and the interest rates you are earning on your savings is essential. By staying informed and being proactive with your savings, you can make the most of the current situation and ensure your money is working for you.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The Financial Conduct Authority (FCA) does not regulate cash advice.

The accounts and rates mentioned in this article are accurate and correct as of 20/02/2025.

As expected, the recent news from the Bank of England has delivered a blow to savers, as the base rate was cut to 4.50%, from 4.75%. 

Following this news we would expect to see cuts to both the savings accounts currently available, but also existing variable rate savings products.

However, this could also serve as a timely opportunity for savers—a reminder to review and optimise their savings before rates decline further.

Analysis by Yorkshire Building Society and data consultancy CACI found that nearly £400 billion is languishing in savings and current accounts earning 1% or less! Savers who are willing to shop around could easily boost returns and secure rates of over 4%, even if they need to retain easy access to their money.

On a balance of £10,000 that means earning in excess of £400 instead of nothing! It’s effectively free money.

For those who can afford to lock up some of their funds, there are still highly competitive inflation-beating fixed-term savings accounts available, which could protect against further rate cuts.

While inflation currently stands a little above the Bank of England’s 2% target, it’s expected to rise slightly further before settling back to around 2% by the end of the year. The good news is that many top savings rates are paying well above inflation at its current level — even after tax — giving savers a chance to protect and grow their money in real terms.

So, locking some cash away into a longer-term fixed account could be a prudent strategy.

If inflation falls back to 2% as projected, savers will be pleased to have locked into rates that comfortably outpace the rising cost of living, for longer. But it’s crucial to ensure you won’t need access to these funds before the fixed term bond matures, as early withdrawals aren’t allowed.

And don’t forget fixed term cash ISAs – which do allow early access, although with a hefty penalty. With tax free interest, the returns are likely to be better than from the bond equivalents.

Although the headline rates on bonds look as though they will provide more, they may not if you pay tax on your savings. For example, if you were to deduct basic rate tax from the top 1-year bond paying 4.66%, the net rate is 3.73%. In the meantime, the top 1-year fixed rate cash ISA is paying 4.45% tax free. So, on £20,000 you would take home £746 from the bond, but £890 from the ISA!  

That’s why for many the cash ISA allowance is not to be disregarded.

The bottom line is that with rates still attractive, now is the perfect time for savers to take control, avoid dormant cash traps, and maximise returns and tax-efficiency while they can.

Take a look at our whole of market, independent and unbiased Best Buy tables.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate tax advice. 

The accounts and rates mentioned in this article are accurate and correct as at the time of writing.

 

Who deals with the finances in your household? Would your family know where to look should something happen to you?

In the past, having a will would be how your final wishes were granted for the distribution of your assets after death…

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But is it enough in the new digital world?  

As the financial industry transitions towards increasingly using technology, your loved ones are unlikely to unearth your financial information by searching through a physical filing cabinet. Finder, a global fintech, estimates that in the UK alone, 47 million people use some form of online or remote banking – that’s 87%!  In the last decade especially, each of our digital footprints has grown exponentially. With multiple logins, passwords, usernames and accounts held across different websites and portals it’s hard to keep track yourself. The question is, how would your loved ones cope with this should you pass away?

No one can dispute that navigating the death of a loved one is one of life’s biggest challenges. To further complicate things, a recent survey by consumer group Which? has indicated that 76% of members surveyed had left no plan for what to do with their digital assets should they die.

Removing the additional complexity of trying to locate relevant documents to settle your estate can only be of benefit to those you leave behind. Although you can name a ‘digital executor’ in your will, this does not extend to consolidation of your financial affairs into one accessible place. TPO Wealth solves this problem for you.

What is TPO Wealth?

At The Private Office, all our clients have access to a digital filing cabinet, at no additional cost, through our secure online portal TPO Wealth. As with a physical filing cabinet, here documents can be stored safely and securely. By leaving behind instructions for family members on how to access this, the painful process of settling your estate can be expediated and enhanced.

With your consent, your solicitors and accountants can also access information you deem appropriate, such as tax returns. This capability allows for a seamless and effortless experience for you. You can have confidence that your information is safe, whilst allowing trusted contacts to have access to relevant documents.

Our clients use TPO Wealth to file personal financial documents and those they choose to share with professional contacts, such as their:  

• Tax Information 
• Will 
• Invoices 
• Details of professional contacts 
• In case of emergency details 

This can be particularly useful for the self-employed. As of October 2024, the statistical agency Statista estimates that 4,383,000 people in the UK are self-employed. That’s 13.1% of the workforce! Granting your accountant access to secure documents on TPO Wealth could substantially speed up the arduous process of filing tax returns and completing annual accounts.

With all the information neatly stored in one place, the need for time consuming back-and-forth is reduced. You’re free to get on with life’s more important things.

What about if you become incapacitated? 

Beside from the death of a loved one, information may be required, in other instances. Consider critical illness or incapacity. Should something happen to you, access to your TPO Wealth account and those within the remit of your Power of Attorney rights can be granted. Ministry of Justice data from 2024 indicates just how slow the Lasting Power of Attorney process can be – in fact, one application was finally processed in 2024 after a total of 2,777 working days!  

Would you like to take control of your finances?

Beyond secured storage of important files, with TPO Wealth you can track investment performance and the growth of your savings, across various accounts with different providers, all in one place. Using clear graphics, our clients can track the value of their net-worth in real time. Features such as an in-built property value calculator contribute towards overall peace of mind, as you can get a clear picture of the state of your finances, all at your fingertips.

If you’d like to learn more about how TPO Wealth can help to consolidate your financial affairs into one simple, easy-to-use place, we would be happy to help.

So why not get in touch?

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

TPO Wealth is only available to clients of The Private Office.

The Financial Conduct Authority (FCA) does not regulate estate planning or tax advice.