A basic rate tax payer should look for a savings account that negates the impact of inflation, according to financial comparison website Moneyfacts.co.uk.
Following the publication of the inflation figures this week, which showed a rise in the consumer price index to 3.2 per cent, Moneyfacts has warned savers to take this into account when choosing where to put their savings.
In order to obtain the best rate, a saver paying the basic tax rate needs to track down a savings account which pays four per cent per annum. The website has identified 31 accounts to choose from, all of which would negate the inflation impact.
Higher rate tax payers need to find a savings account that pays 5.33 per cent per annum, but their choice is far more limited, with only two accounts identified as doing so by Moneyfacts.
Darren Cook of Moneyfacts.co.uk, warned that those who would be most affected by inflation were those who relied on their income being supplemented by their savings.
“The average instant access savings rate is still at rock bottom at a rate of only 0.79 per cent. The only trigger for any improvement in savings rates may be a surprise increase in the Bank of England’s base rate but this is not likely to happen soon despite the increase in the rate of inflation.
“It is difficult for savers, at best they should try to stay within an arms length of inflation and try to weather the storm of low rates and high inflation,” he added.
