With the deadline to put money into your tax-free cash Isa account fast approaching, Which? provides our weekly look at the best deals out there.
Cash Isa deadline is 5 April 2014
According to the latest quarterly savings survey from National Savings & Investments (NS&I), people are saving more today than they were a decade ago. Britons are now saving £98 a month, compared with £82 ten years ago.
To maximise your tax-free allowance, remember to save in a cash Isa before putting your money in an ordinary taxable savings account.
The cash Isa deadline is important as it signifies the end of the tax year. You’ll lose this year’s tax-free savings allowance if you haven’t put money into an Isa before that date.
Each year you can deposit your savings into a cash and/or stocks and shares Isa. The overall limit for the tax year ending 5 April 2014 is £11,520 and this goes up to £11,880 for the new tax year of 2014/15 starting 6 April 2014. However, the limit for cash Isas is £5,760, going up to £5,940 for 2014/15.
The market’s best cash Isas
Instant access cash Isa
Top of the pile at the moment in the best instant-access cash Isa sector are National Savings & Investments and Stafford Railway Building Society, both offering deals paying 1.75%. However, these accounts don’t allow transfers in from other providers.
Darlington Building Society’s Cash Isa and Krbs Easy Access Cash Isa Issue 6 are worth noting as they allow transfers in from other providers and offer a headline rate of 1.70%. Neither account includes a bonus, so you won’t have to worry about the rate dropping off after 12 months.
Notice cash Isa
Notice cash Isa accounts tend to pay a higher rate for locking up your money, but don’t rely on this always being the case as some accounts don’t pay more than an instant access Isa. Krbs’s 60 Day Notice Isa Issue 6 pays an attractive rate of 1.80%, but you’ll need to give 60 days notice to get at your cash.
One-year fixed-rate cash Isa
Britannia’s one-year fixed-rate cash Isa is the best in the market at present paying 1.85% and allows transfers in from other providers. The one-year fixed-rate Flexible Isa from Krbs isn’t far behind with a rate of 1.80%.
Two-year fixed-rate cash Isa
The two-year fixed-rate cash Isa deal from Britannia, paying 2.05% is the best product if you’re happy to tie your money up for two years.
Three-year fixed-rate cash Isa
United Trust Bank’s fixed rate Isa account currently tops our three-year fixed-rate cash Isa table paying 2.50% on initial balances of at least £5,000. Virgin Money is next paying 2.40%.
Four-year fixed-rate cash Isa
The Halifax and Julian Hodge Bank both pay 2.00% and are the best four-year fixed-rate cash Isa deals at the moment.
Five-year fixed-rate cash Isa
The Leeds Building Society’s Fixed Rate Isa account currently leads our five-year fixed-rate cash Isa table, paying 3.05%. This account is closely followed by Skipton Building Society and Virgin Money, both paying 3.00%.
Cash Isa tip of the week
If you want to move money from one Isa to another, your old and new Isa providers should arrange the transfer of your funds between them, protecting your tax-free benefits. You’ll need to complete an Isa transfer form, which will include a note to be sent to your existing Isa provider.
The key point is that you shouldn’t just take out the cash from your Isa account to deposit elsewhere – you’ll lose your tax benefits by doing this.