Bank cash offers 'harming the ISA brand' - papers

Banks are denying savers tax benefits by paying less on fixed-rate cash Isas than on similar taxable bonds.

In some cases earnings are higher even after tax on a taxed bond than in a tax-free Isa, the Daily Mail reports. One of the worst examples is Lloyds TSB, which pays 2% on a one-year, fixed-rate Isa, but 2.2% after tax (2.75% before) on its taxable one-year bond. The best one-year, fixed-rate bond currently pays 3.25% before tax compared with the 3% paid on fixed-rate cash Isas. On longer-term money, where banks and building societies are competing fiercely, the gap is wider. Halifax and C&G, both part of taxpayer-subsidised Lloyds Banking Group, pay 4.1% on taxable two-year, fixed-...