Building society sees no dip in Isa demand after tax changes

Building society sees no dip in Isa demand after tax changes

Changes to tax on savings announced in the spring Budget have had little effect so far on demand for Isas, Leeds Building Society has found.

In the final Budget of the last parliament, George Osborne stated that the first £1,000 of income on savings would be free from income tax from the start of the next financial year in 2016, prompting questions about the future of Isas, which are already free of tax on interest.

However, since the start of the current 2015/16 tax year, the most popular of Leeds Building Society’s Isas was a two-year fixed-rate deal which matures in 2017, more than a year after the change to the savings allowance.

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Jaedon Green, the society’s general manager for product development, commented that following the rule change, consumers might have been expected to focus on instant access or one year products in readiness for moving their money to a non-Isa account.

“However, we’re still seeing strong demand for Isas, particularly those for fixed terms of two years or longer.

“While the majority of savers will benefit from the tax changes coming into force in April, it seems that plenty of people still want a specific account which pays interest tax-free if they feel the return is competitive.”