Guaranteed flexible protection against rising inflation - tax free

Leeds Building Society's Inflation Buster ISA, which is guaranteed to beat inflation by paying RPI plus 2.5%, would pay a tax free return of 7.1% if RPI over the term is equal to 4.6%, which is the latest figure released by the Office for National Statistics for June 2008.

The Retail Price Index (RPI) 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.

Karen Wint, General Manager Marketing and Customer Services said "The current economic outlook makes the Inflation Buster ISA even more attractive following Mervyn King's open letter to the Chancellor last month explaining the current level of inflation.

"The letter stated that ‘As things stand, inflation is likely to rise sharply in the second half of the year'. The latest RPI figure of 4.6% for June is up from 4.3% in May, meaning that savers have already seen their real return eroded in the last twelve months by 4.6%. Based on the latest information this is set to get worse."

"A tax free return of 7.1% would mean an equivalent interest rate of 8.9% for a basic rate tax payer and 11.8% for a higher rate tax payer. The Inflation Buster ISA also allows customers to invest all 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.

"Flexibility is provided by easy access. Customers can close the account at anytime and receive any interest already paid plus 2.50% on the amount withdrawn."

For more information, customers can call into their local branch, or visit leedsbuildingsociety.co.uk.