Make Tax Free Cash ISAs Available in Any Savings Account

Written by Karen Bryan

coinflowerI’m frustrated that many bank and building society best paying accounts aren’t Cash ISA accounts. For example, Halifax are currently paying 3.2% on a standard 1 Year Fixed Online Saver but only 2.25% on their ISA Saver Fixed. How on earth can they justify this whopping 1% difference in returns between a standard and a Cash ISA fixed rate account?

Now this is not the case for all banks, Santander are offering 3.2% on their standard 1 Year Fixed Rate Bond and a higher 3.5% on the 1 Year Fixed Rate ISA.

However, Cahoot (a Santander owned internet bank) is currently, 19 April 2012,  paying the best one year fixed  rate I can find of 3.65% on their Fixed Rate Bond Issue 2 for balances of £25,000. I’d like to be able to get that rate on my accumulated Cash ISA savings.

Why should banks pay you a lower rate of interest because you want to shield your interest from income tax? I’d like to see a situation whereby banks and building societies are legally obliged to permit customers to use their Cash ISA allowances in any savings accounts, instead of only in specific Cash ISA accounts. This should be coupled with doubling the current £5.640 Cash ISA limit, to match the Stocks & Shares ISA annual limit. These two measures would ensure that UK savers can earn the highest possible tax free growth or income on their Cash ISAs.