THE P. The people’s passbook pay rate is expected to drop in August 2023 to match the level of inflation.
[Updated Feb 10, 2023 2:40 PM] Bad news for savers, the popular passbook pay rate may drop in the coming months! After an exceptional increase on February 1, 2023 (from 4.6% to 6.1%), its rate should align with the consumer price index over the last half-year. Inflation is expected to reach just over 5%, hence the lower LEP rate. The new remuneration should reach 5.5% from August 1, 2023. Be careful, if the LEP rate were to drop, it would not become a bad investment. This booklet would remain significantly more advantageous than the booklet A (3%).
For now, the LEP rate is set at 6.1%, unheard of since July 1985. Savers who can hope to pocket 305 euros in interest at the end of the year, for savings of 5,000 euros. That is a net gain of 75 euros compared to the old rate. Remember that the LEP has a fairly limited ceiling, set at 7,700 euros excluding capitalized interest. Also, be aware that your reference tax income must not exceed 21,393 euros for a single person if you wish to open such a booklet. On the other hand, its rate of pay is now twice as profitable as that of its big brother, the livret A.
The popular savings account rate has been increasing quite sharply since February 1, 2022 due to galloping inflation. Fixed at 4.6% since August 1, 2022, a further increase occurs on February 1, 2023. This time, the LEP rate reaches 6.1% as announced by the Minister of the Economy Bruno Le Maire, in January . With such a rate, here is the interest you can expect to earn at the end of the year:
It is possible to invest up to 7,700 euros in an LEP, excluding capitalized interest. It is therefore possible to continue to capitalize interest once the ceiling has been reached. No operation can have the effect of making the account debit. The minimum initial payment on the LEP is set at 30 euros. Also, the reference tax income must not exceed certain limits, which are set according to the composition of your household. Here are the caps that apply this year:
When the saver’s income exceeds these ceilings during a year, he can keep his LEP if his income for the following year falls below the eligibility limit.
Only persons whose tax residence is located in France can request the opening of a LEP. Only one LEP can be subscribed per person, within the limit of two booklets per tax household. The opening of a popular savings account is then conditioned on the level of income of the subscriber. It is also necessary to be of legal age and no longer be attached to the tax household of his parents.
In order to facilitate access to this savings product, Bruno Le Maire had announced a simplification of the opening conditions. “Presenting a tax notice to your bank when opening a LEP will no longer be mandatory,” he explained. “The same goes for the annual audits. It will be up to the bank to verify the eligibility of the saver with the tax authorities.” Since March 15, 2021, a bank can directly take care of contacting the tax authorities to verify that you meet the conditions for opening and holding an LEP.
The role of the booklet A can be likened to precautionary savings. It is advisable to place two to three months’ salary on this savings product. Revalued by 3% on February 1, 2023, the livret A has a higher ceiling than the LEP, 22,950 euros for an individual. Only one booklet A per person is authorized.
However, the LEP remains more than interesting for low incomes. Its rate is more than twice as profitable as that of the Livret A, with 6.1% interest since February 1, 2023. “It is a product with a capital guarantee and total liquidity which is extremely attractive. “There is no equivalent in terms of remuneration on short-term savings”, analyzes Philippe Crevel, Director of Cercle de l’Epargne.
The taxation of the LEP is modeled on that of the Livret A. This savings product is totally tax-free. In other words, the LEP is not subject to income tax, social security contributions, including the general social contribution (CSG) and the contribution to the reimbursement of social debt (CRDS), nor to the flat tax at 30 % on capital income. Thus, the interest received is not to be mentioned in the annual income tax return.
It is possible to request the closure of a LEP at any time and free of charge according to the terms and conditions provided for in the contract. Simple letter, registered letter with acknowledgment of receipt or form are possible. The LEP remains open as long as the eligibility conditions related to income taxation are met. To do this, it is necessary to send a tax notice to the bank each year, unless it decides or proposes to approach the tax authorities directly to check itself that the conditions of detention of this savings product. are well respected.
