Rates in tax free bank savings accounts have been reduced to a historically low of 1.25% from 1st August.

The three main schemes that are affected by this change are are Livret A, Livret de Développement Durable (LDD) and Livret d'épargne populaire (LEP)

Since 1st February the rates on these schemes have been1.75% for the Livret A and LDD, and to 2.25% for the LEP.

With the fall in the rate of inflation since this time, to which the schemes are linked, the rates offered on these schemes is automatically reduced.

Whilst the rates for the Livret A and LDD will fall to 1.25%, the new rate for the LEP will be 1.75%.

These are clearly very meagre rates, but the schemes are a painless way to park surplus cash, as they are risk and tax free and immediately accessible.

The total amount that can be deposited on a Livret A was increased last year to €22,950 per person (excluding interest) from €15,000.

You can hold €12,000 in the LDD and €7,700 in the LEP, again excluding interest.

As the other two accounts can be held simultaneously with the Livret A this means that the total sum that can be deposited on tax free savings accounts is €42,650 per person, subject to eligibility.

So for a couple that means you can deposit and hold €85,300 on these accounts, plus accrued interest.

Interest is calculated every 15 days and is completely free of income tax and social charges. The sums held on the accounts are also immediately accessible.

The only potential grit in the scallop is that eligibility to the LEP is subject to you paying no more than €769 a year in income tax in France. That is actually an attainable target for many expats, as the income tax system in France is quite generous, particularly at low to moderate incomes.

If you have children it is also possible to add another tax free savings account to this total - the Livret Jeune. However, this young persons (12-25) savings account is subject to a maximum initial deposit of €1,600, although it does offer a more attractive savings rate of around 3.0%.

The rates of these tax free savings accounts are reviewed twice a year (15 July and 15 January) and the rates determined by the government on the basis of advice from the Bank of France.

All banks in France offer the tax free savings accounts. There is no residence requirement to hold a Livret A account, although that is not the case with the LDD and LEP, which both require that you are resident in France.