Unique tax-free return on savings guaranteed to beat rising inflation

Leeds Building Society is set to launch another version of its Inflation Buster ISA, available from Monday June 2nd, which has proved very popular with customers looking for a real return on their savings. The new account is guaranteed to beat inflation by 2.50%.

The return is linked to the Retail Price Index (RPI), which is the official measure of how much goods and services bought by an average UK household changes. Items measured by the RPI include food, clothing, education and child care, council tax, heating and lighting and mortgage interest payments.

As Karen Wint, General Manager Marketing and Customer Services explains, the current economic outlook make this latest bond even more attractive. Karen said "Mervyn King, the Governor of the Bank of England, stated last week that ‘rising energy and import prices will almost certainly push inflation up further, possibly significantly, in the coming months. As those price increases feed through to household bills, they will lead to a squeeze in real take-home pay'.

Karen continued "Savers have seen their real return eroded with prices increasing by 4.20% in the last twelve months and, with the prospect of rising inflation, we expect demand for the Inflation Buster Bonds to be very strong and we are now launching another tax free version, which is extremely attractive in the ISA market."

For example, if RPI over the period is 4.20% Leeds Building Society's Inflation Buster Bond would pay a return of 6.70%. At current levels, the return on these products is very good and if inflation rises the rate of return will increase making it a very attractive option compared to even the highest fixed rate available.

Karen added "The only other RPI linked account, offered by National Savings & Investments, offers a return of RPI plus 0.25% for a 3-year term and limits the maximum investment to £15,000 per issue. Investors wishing to invest in the Inflation Buster ISA have the option to transfer their previous years ISA subscriptions and some customers, who have paid in the maximum allowance each year, may have built up a capital balance of £39,600 plus interest.

"Furthermore, customers have access to all their funds at any time and the account can be opened at any of our 68 branches or by post. I believe this is an excellent addition to any investor's portfolio."

A maximum investment of £39,600 made on 1 June 2008 will have a tax free maturity value of £45,460.89 after two years, assuming that the rate of inflation is 4.20% over the term. This is made up of £330.90 for early investment and £5,529.99 from the RPI inflation rate.

For more information, visit leedsbuildingsociety.co.uk.