Martin Lewis has urged people to check their savings accounts, warning that many could be missing out on a significant income boost. The consumer champion highlighted a case on his BBC podcast where a couple on benefits had £150,000 in savings earning just £2,300 in interest annually.
The couple, both in their 50s, receive Employment and Support Allowance (ESA) and Carer's Allowance. Lewis suggested they were asking the 'wrong question' about tax, as their main issue was the low interest rate. He noted that with rates above 4% available, they could earn nearly £5,000 a year – an extra £2,700.
Lewis advised moving savings into an ISA to protect from tax, with each person able to deposit up to £20,000 a year. He also recommended easy access accounts offering up to 4.5% interest. Given their benefits income of around £11,440 to £11,960 a year, they fall below the personal allowance of £12,570, meaning no tax on interest.
He pointed out an additional starting rate for savings of £5,000, which is reduced by £1 for every £1 of income above the personal allowance. Basic rate taxpayers can also earn up to £1,000 in interest tax-free. Lewis stressed the importance of making savings work harder, especially for those with disabilities or health conditions.
