![]() |
Income Protection for Contractors Essential cover for you and your family in case you're unable to perform your contract duties due to poor health. Read more and get a quote for Income Protection (PHI) |
Cash ISAs have been the fail safe option for savers since they were first introduced 10 years ago. This is largely due to the attractive tax benefits that they offer however, with base rates at historic lows and interest rates falling on a monthly basis, savers are seeing the return on their investment dwindle.
This time last year, ISA providers were offering up to 6% on their Cash ISAs but now savers are lucky if they receive half that, with many High Street banks offering as little as 1%.
This has been a massive blow to prudent savers that may have invested their full ISA allowance each year and could have watched the annual interest payment fall by £1000.
With returns at an all time low, savers are increasingly tempted to jump ship and look for an alternative home for their cash.
What can you do?
Changes to ISA legislation that came into force last April allow investors to transfer funds from cash into a stocks and shares ISA without losing any of the tax breaks.
This is an increasingly attractive prospect as interest rates fall and many savers are opting for corporate bonds as a midway point between cash and the stock market.
Despite carrying a lower risk than stocks, the returns can still be high, particularly as bonds look very undervalued at present.
It is worth bearing in mind that ISA's can only be transferred from Cash to Stocks and Shares once and can't be switched back.
So you need to be prepared to accept that this is a one way street for your money but if you can invest for the long term then you are in a good position to ride out any short term fluctuations in the markets.
If you are concerned about the risk involved in timing your entry into the stock market you could drip feed money each month from your Cash ISA into your Stocks and Shares ISA.
This is known as Pound Cost Averaging and allows you to minimise your exposure to fluctuation in the markets as you are not investing all of your capital in one hit.
Can you afford to wait?
You might find it useful to keep an amount of cash aside to act as a safety net in case you find yourself in between contracts or with an unexpected bill to pay.
If you feel that you cannot take the risk of moving your cash over to a stocks and shares ISA then you may just have to ride out what could be several years of low interest rates. There is, of course, an inflation related risk in doing nothing too.
More Information
Tony Harris is Managing Director of Contractor Financials, contractor-specialist Independent Financial Advisers. You can read more about the services available to contractors in our guide to contractor finances.
| Our Partners |
|
Parasol PAYE umbrella Award winning service |
|
Contractor Accountants Full Service, Fixed Fee! |
|
Free Umbrella Company Save over £1400 p.a. |
|
ClearSky Accounting From £95 per month |
|
Fixed Fee Accounting Contractor Specialists |
|
Umbrella4Contractors Low fees, same day setup |
|
Free IR35 / Tax Review Call ICS - 0800 195 3750 |
|
Umbrella Co. Solutions Only £19.95 per week |
|
PRINCE2, MSP & M_o_R Maven Training |
| Contractor Insurance |
|
Hiscox Office Insurance Instant Online Quote |
|
IR35 Insurance Essential Protection |
|
Income Protection If you're unable to work |

| Contractor Services |
|
Compare Insurance Deals PI & Business Liability |
|
Contractor Ltd Company Instant online formation |
|
IT Contractor Pensions The last great tax break |
|
Private Medical Insurance Tailored contractor cover |
|
IT Contractor Mortgages Based on hourly rates! |
|
Protect Your Income Get a PHI quote |
|
IT Contractor Life Cover Protect your dependants |
|
Critical Illness Cover Comprehensive cover |
| IT Contractor Guides |
|
Contractor Umbrella Umbrella Co. Advice |
|
Recession Tips Contractor crunch tips |
|
Contractor Rates Latest rate news |
|
IR35 Factors Are you caught by IR35? |
|
What is IR35? Guide to the tax rules |
|
Security Clearance Is it discriminatory? |
|
Corporation Tax IT Contractor Guide |
|
Contractor Mortgages Get a mortgage quote |
|
IT Contractor Accountants Accountancy Directory |
|
Contractor Banking Business bank accounts |
|
Contractor Life Cover Contractor protection |
|
IR35 Insurance Tax investigation cover |
|
Contractor PI Insurance IT contractor cover |
|
Umbrella Companies Links to key providers |
|
IR35 Compliance Is your contract caught? |
|
Critical Illness Cover Guide for contractors |
|
IT Contractor CV Classic CV mistakes |
Stay up to date with our RSS feed | Terms of Use | About Us | Directory | Site Map | MSC Legislation | Income Shifting
Copyright © 2006-9, Contract Eye Limited, All Rights Reserved.
UK Contractor Guides, Contractor Accountants, Umbrella Companies, IR35, Insurance, Contractor Mortgages
Design by Blue Egg Web Agency