Savvy savers know ISAs aren’t just for April

As Brits across the country strive to meet the new 31 October deadline for paper ‘Self Assessment' tax returns, Alliance & Leicester reminds savers to make the most of their tax-free ISA allowance all year round and not leave it to the last minute, at the traditional ISA rush during March and April.

While eight out of ten savers (80%) cite a good rate of interest as the most important factor when choosing a savings account, less than half this number (42%) identify not paying tax on their savings as an important consideration. For taxpayers, tax of 20% is automatically deducted from the interest paid on all non-ISA savings accounts - effectively reducing the interest received on an account paying 5% to just 4% and making the rate far less competitive than many savers might think.

Hetal Parmar, Manager for Savings at Alliance & Leicester, said: "The tax self assessment deadline serves as a timely reminder for savers. In the current climate every penny counts when it comes to savings so making your money work hard for you is crucial. A cash ISA is a simple savings account which pays tax free interest. It's a great way to make sure the tax man doesn't get his hands on your hard earned savings."

A&L recommends the following strategy for successful saving:

First of all, have a pot put by for your day to day needs, this could be a current account with a high rate of interest, but make sure that you will be able to access the money without penalty as soon as you need it.

Next, it really makes sense to have a rainy day fund and a good rule of thumb is to have about three months' income saved in it.

Thirdly, if you want to save for any specific items such as a new car, holiday or wedding, set aside a specific pot for this - if you have a specific timeframe for saving, so much the better as you may be able to take advantage of longer term accounts with high rates of interest.

And lastly, think carefully about your longer term financial needs and start building up a long term fund.

Alliance & Leicester offers a competitive tax-free savings account called Easy ISA, available from all Alliance & Leicester branches or online at alliance-leicester.co.uk