Don’t abandon the Isa

WHEN the Isa was first announced in 1997, the then Chancellor, Gordon Brown, said he hoped it would encourage a new national savings habit.

And his wish came true. Britons fell in love with the tax- free account, piling hundreds of millions of pounds into cash, stocks and shares every year.

The start of March is now known as ‘Isa season’, when banks and building societies frantically launch top deals to lure savers rushing to use up their annual allowance before it resets on April 6.

But the arrival of the personal savings allowance, which enables basic-rate taxpayers to earn up to £1,000 in savings interest tax-free, has had the knock- on effect of diluting the cash Isa.

This is because you could often get a better rate with an ordinary taxable account and still pay no tax on interest earned.

Politicians had also realised by this point that Isas were a votewinner and had launched a string of new types of account.

All this means a once very simple yet brilliant savings product can now be fiendishly complicated.

Meanwhile, after ten years of rockbottom rates, the amount of money we are putting aside for the future is also at an historic low.

But none of this is proof that we should stop saving — and we certainly shouldn’t abandon Isas.

Indeed, if rates continue to creep up, we increasingly risk exceeding our personal savings allowance — particularly if you are a higher earner with a lower tax- free allowance of £500.

The Government is also far more likely to scrap the personal savings allowance than touch our precious Isas (only last year, the tax-free dividend allowance was cut from £5,000 to £2,000). Meanwhile, for those dabbling in the stock market, an Isa protects any profits and income from tax.

And, best of all, as our Prudent Investor points out on Page 46, Isas make filling in your tax return a doddle.

So, for now, long may the love affair continue.

Beat scammers

ON MONDAy, our investigations team exposed how conmen based in India are terrorising thousands of Britons every day by posing as HMRC officials.

Victims are typically left a voicemail claiming they owe tax and face arrest if they do not pay their bill immediately. If they call back, the crooks then convince them to make a bank transfer and they never see their money again.

Chancellor Philip Hammond and Financial Secretary to the Treasury Mel Stride have promised that plans to remove phone lines used in scams are well under way — with almost 450 numbers removed from service. But telecoms giants need to do more still to stop these calls getting through.

Number- spoofing technology that allows crooks to make it appear as though they are calling from a genuine telephone number is hugely effective in convincing victims they really are speaking to tax officials — yet it is still freely available online.

Readers also complain that HMRC is not doing enough to highlight the scam to taxpayers.

They add that if the tax system wasn’t so cumbersome, it wouldn’t be so easy to confuse people into thinking they owe money in the first place.

Remember, HMRC will never call you out of the blue and demand payment. If you receive a similar call, hang up — and do not respond to voicemails, either. Never give up! FINAlly, a reminder of how it can pay to persevere. last May, Money Mail reader Wendy was told by staff at a Nationwide branch that she could earn 5 pc if she switched her Flex account to a Flex Direct savings account.

It wasn’t until July that Wendy realised she had lost her free European travel insurance in the switch — and the perk was no longer offered to new customers.

As a frequent traveller, Wendy never would have willingly given up her cover and she implored Nationwide to reinstate it.

The society declined to do so, but Wendy refused to let it go.

Six months on, Nationwide has finally buckled.

It said that while it was sure Wendy had been made aware the insurance would cease when she moved accounts, it would reinstate her policy as a gesture of goodwill and pay her £ 50 in compensation.