The impact of inflation on your tax-free returns

April 30, 2019

Whether you invest in Stocks & Shares ISAs, Cash ISAs or Innovative Finance ISAs, have you thought about the impact inflation could be having on your tax-free returns?

With the current rate of inflation at 1.9% (according to The Bank of England), it could be overtaking your rate of return - so you may wish to ensure you are getting a rate of interest which beats any general rise in prices.

Interest rates can vary between ISAs

IFISAs typically offer a higher headline rate of return than traditional bank or building society Cash ISA accounts but come with a higher risk profile – including risk to your capital.

For example, in October 2018*, the average Cash ISA was offering rates of return equating to 1.29%. Although rates have increased slightly into 2019, Cash ISAs are unlikely to offer significantly higher rates of return until the Bank of England increases its base rate, and banks/buildings societies pass this onto savers.

So it’s important to know whether or not your current ISA is beating inflation.

We’ve created an indicative ISA calculator to project how much tax you can save when investing through your ISA allowance and to see if your projected returns are beating inflation.

It looks at the growth of your savings/investments (ISA or non-ISA) in real terms, or once adjusted for inflation, so you can get a true understanding of the value of your money.

Take the inflation challenge.

IFISAs are investments in peer-to-peer loans. Your capital is at risk and is not protected by the Financial Services Compensation Scheme.


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