Analysis of current savings rates by Defaqto shows that, even at this lower inflation rate, very few savings accounts are able to give a real rate of return to taxpayers – proving the need for a savings vehicle that doesn’t not accrue interest, so it affectively tax-free.

David Black, principal consultant for banking at Defaqto, says: “The dramatic falls in the bank base rate has meant that savers are facing really bleak times and many taxpayers now have few opportunities to obtain a real rate of return after inflation and tax are taken into account.

“A higher rate taxpayer now requires a gross return of 5.17% just to keep pace with inflation whereas a basic rate taxpayer requires 3.88%.”

With offset, any money paid into the mortgage will not make interest repayments, so there is nothing for the taxman to take. Although you miss out on the interest with offset, it seems in this difficult time it is more advantageous to miss out on the tax burden instead.

If you want to consider a way of saving money where you can avoid tax, talk to a mortgage broker today. It’s pure savings with offset, savings that are only helped by the low base rate. Choosing offset now can lower your debts, help pay off your mortgage faster and could make your money work harder than any saved, lump sum right now in the UK.

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog.