By Baroness Stowell of Beeston - 31st August 2011
Some banks are not passing the full tax relief on fixed rate cash ISA accounts to their customers, says Baroness Stowell of Beeston.
This article was first featured on May 23rd 2011, ahead of Baroness Stowell's question on Interest bank accounts.
I have tabled a question asking the government what assessment they have made of interest rates for cash ISAs compared with other savings accounts, because some banks are offering better deals on their fixed rate bond accounts than on their equivalent fixed-rate cash ISAs. In other words, it seems in effect that, some banks are not passing the full tax relief on fixed-rate cash ISA accounts to their customers.
Cash ISAs are a great incentive for us all to save. We benefit, and so do the banks: last year 15 million of us held £172bn in cash ISAs. But only customers, not banks, are supposed to benefit from the ISA tax relief.
The way in which banks operate cash ISAs is complex and opaque, making it almost impossible for people to judge whether they are getting a good deal or not.
But fixed rate accounts make comparison that bit easier and, after a friend highlighted what seemed like a discrepancy to him, I decided to do my own research. I looked at the websites of a random sample of high street banks and saw evidence suggesting that – in some cases – fixed rate cash ISA savers are not getting the full tax relief which the Treasury intends that they should receive.
So in the House of Lords at question time today I am aiming to raise awareness of a practice which is unfair. And depending on how Lord Sassoon (Treasury minister in the Lords) responds to my tabled question – in my supplementary I will ask the Treasury to join me in demanding that the banks stop this practice and give their customers a guarantee that they will always match or better their equivalent fixed-rate bond accounts – I hope that savers, and not the banks, receive the tax relief which is rightfully theirs.
Tina Stowellwas raised to the peerage as Baroness Stowell of Beeston, of Beeston in the County of Nottinghamshire, early in 2011.
Having previously worked as head of corporate affairs for the BBC, she now runs her own strategic communications consultancy, 'Tina Stowell Associates'.
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