30/04/03

Employees must have felt the effect of the 1% rise in National Insurance contributions on their pay-packets last month … but opening a Direct Line Mini Cash ISA this year may help to even the score with the taxman, as the tax-free benefit of an ISA will help to claw back some of that additional deduction.

For example, an employee with an average £20,000 annual salary will be paying an extra £154 this year in National Insurance contributions compared to last year.

But by opening a Direct Line Mini-Cash ISA with £3,000 in one year, they would receive £117 in interest at current rates, tax free … more than two-thirds of the additional National Insurance contributions coming right back into their pocket !

By comparison, a basic rate tax payer with an average savings account would need to have £8,125 in their account to earn the same amount of interest and a higher rate taxpayer £10,833.

In addition, Direct Line savings customers can use a mini cash ISA to earn even more interest with Direct Line's unique 'pooling' facility. This feature allows customers to combine their Direct Line savings accounts and ISAs to earn a higher rate of interest payable on the total amount.

For example, if a customer had £3,000 in a Direct Line cash mini ISA, they would earn 3.9% in interest. However if they also had £2,000 in a Direct Line Direct Access savings account, that would earn the 3.0% savings interest rate paid on a combined total of £5,000 (the £3,000 in the ISA and £2,000 in the Direct Access account) instead of just the normal 2.85% paid on £2,000.

It's not just individual accounts that can be pooled to take advantage of higher interest rates. Both family members and friends can use this unique facility for any combination of Direct Line savings and mini cash ISAs. With just one phone call, all accounts can earn the best rate of interest, yet all accounts remain separate.

Provided by Direct Line