16/02/2010
The latest annual inflation figures of 3.7% for the Retail Prices Index (RPI) and 3.5% for the Consumer Prices Index (CPI) mean that both basic and higher rate taxpayers face a near impossible struggle to get a real rate of return on taxable savings accounts.
The interest rates required on taxable savings accounts merely to keep pace with inflation are:
| Inflation | Basic rate taxpayer | Higher rate taxpayer |
| Retail Prices Index (3.7%) | 4.63% | 6.17% |
| Consumer Prices Index (3.5%) | 4.38% | 5.83% |
“The average instant access account pays 0.86% gross which equates to a paltry 0.69% for a basic rate taxpayer and only 0.52% for a higher rate taxpayer. David Black, banking specialist at Defaqto said: “The stark reality is that there are now no taxable instant access or notice accounts that will give a real rate of return to even a basic rate taxpayer let alone a higher rate taxpayer.
“Savers have to be incredibly proactive to get the best deals and, apart from some Cash ISAs, the only bank and building society savings accounts that give the higher rate taxpayer any chance of a real rate of return are a handful of regular savings and current accounts as well as a few fixed rate bonds that require linked investments in the stock market. The total number of such accounts barely reaches double figures and many of them have conditional additional requirements.
“Those reliant on savings interest to supplement inadequate income will be devastated by this double whammy of rising inflation and low interest rates.
“Even with the tax free Cash ISAs there are only 39 available that pay a real rate of return based on RPI inflation for a £3,600 balance.
National Savings & Investments offer three and five year Index Linked Certificates that are tax free and pay 1% above RPI inflation.
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For further information contact our press office:
David Black
01844 295 535
About Defaqto: www.defaqto.com
Defaqto is an independent financial research company specialising in rating, comparing and analysing financial products.
Since 1994, Defaqto has built the largest, whole of market, financial product database and become one of the leading providers of financial product data in the UK. We now cover over 30,000 products across banking, life, pensions, investments and general insurance.
Our experts validate and analyse the data to provide insight and consultancy to all layers of the financial services sector including IFAs, mortgage and general insurance brokers, providers, web aggregators and the public sector.
Our products and services include the following:
Aequos Online
An extensive, independent, financial product analysis and comparison database available in the UK. The database contains feature, rate and fees information on more than 30,000 products from nearly 2,000 providers. Our customers include leading insurance and assurance companies, banks and building societies and investment organisations.
Defaqto Engage
An integrated system for independent financial advisers (IFAs) and insurance brokers. The system makes the reporting, analysis, recommendation and review process easy, delivering the perfect product to meet client needs.
Defaqto Compare
An interactive, comparison tool enabling consumers to easily compare product features against each other on a host of key features, using a simple ‘traffic light’ system.
Defaqto Star Ratings
Our Star Ratings reflect the quality of a financial product and help to identify the range of features and benefits in each one. We review and assess every financial product across various categories and award a Star Rating from 1 to 5. The ratings are aimed at helping consumers and advisers decide which product suits their specific needs. Providers also use the ratings to ensure they offer products to meet differing consumer demands.
Defaqto Group owns and operates Defaqto Limited and Defaqto Media Limited. Defaqto Group is backed by FF&P Private Equity Limited, the private equity division of Fleming Family & Partners, and Acuity Capital Management Ltd.
