To beat inflation, a basic rate taxpayer at 20% needs to find a savings account paying 4.50% per annum, while a higher rate taxpayer at 40% needs to find an account paying at least 5.99%.

Today there is a choice of forty-seven standard savings accounts that taxpayers can choose from to negate the effects of tax and inflation.

The effect of inflation on savings means that £10,000 invested five years’ ago, allowing for average interest and tax at 20%, would have the spending power of just £9,190 today.

Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said:

“The expected fall in inflation heralds a change in fortunes for savers as more savings accounts finally offer a rate of return that beats inflation, something savers have long been desperate for.

“Today's accounts favour introductory offers which mask the lower rate that is applied on first anniversaries. This means savers need to change their habits from mild interest to a state of ready alertness to changes in the savings account market.

“Today’s rate of inflation means hundreds of thousands of savers need an account paying a hefty 4.50% before they earn a real rate of return on their savings and yet the average no notice savings account only pays a miserly 0.92% which shows the size of the problem.

“The number of savings accounts that beat inflation has risen from a miserly eight last month to a much more respectable 47 today, many of which are fixed rate ISAs.

“However, this is a small blessing when compared to the total number of standard savings accounts available which is 1,100.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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