With the deadline to put money into your tax-free cash Isa account now just over two weeks away, Which? provides our weekly look at the best deals out there.
Cash Isa deadline is 5 April 2014
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 or a stocks and shares Isa, or both. The overall limit for the tax year ending 5 April 2014 is £11,520. The limit for cash Isas this year is £5,760.
Isa Budget changes
However, the Chancellor announced yesterday that the overall investment limit for an Isa in 2014/15 will be increased to £15,000 a year, which can be made up of cash, or stocks and shares, or a mixture of both. The changes introducing the New Isa (Nisa) come into force on 1 July. Check our Budget 2014 report to see all the changes to savings.
To maximise your tax-free allowance, remember to save in a cash Isa before putting your money in an ordinary taxable savings account.
The best cash Isas
Instant access cash Isa
Top of the pile at the moment in the best instant-access cash Isa sector is Stafford Railway Building Society, with its deal paying 1.75% on deposits starting from a minimum of £250. However, this account doesn’t allow transfers in from other providers.
Santander’s Direct Isa Saver is worth considering as it allows transfers in from other providers and offers a competitive rate of 1.60%. However, this account includes a 1.10% bonus payable for the first year, so you’ll need to switch to a competitive account once the bonus periods ends as the rate reverts to just 0.50%.
Notice cash Isa
Notice cash Isa accounts used to pay a higher rate for locking up your money, but at the moment, just two pay more than the top instant access cash Isa rate.
For example, Hanley Economic Building Society’s 60 Day Notice Cash Isa pays a rate of 1.85%, but you’ll need to give 60 days’ notice to get at your cash. This account can be operated at a branch or by post and requires a minimum initial deposit of £100.
One-year fixed-rate cash Isa
National Counties Building Society’s one-year fixed-rate cash Isa is the best in the market at present. It pays 1.76% and allows transfers in from other providers. The one-year fixed-rate Isas from the Bank of Cyprus UK and Tesco Bank aren’t far behind, at 1.75%.
Two-year fixed-rate cash Isa
The two-year fixed-rate cash Isa deals from the Britannia and Halifax, paying 2.05%, are the best products if you’re happy to tie your money up for two years.
Three-year fixed-rate cash Isa
The Halifax, Skipton Building Society and United Trust Bank currently top our three-year fixed-rate cash Isa table, all paying 2.25%. The Bank of Cyprus UK follows closely behind, at 2.10%
Four-year fixed-rate cash Isa
The Halifax’s Isa Saver Fixed account pays 2.40% and is the best four-year fixed-rate cash Isa deal at the moment. The Bank of Scotland and Lloyds Bank are next, at 2.15%. If you have £20,000 or more to invest, the Lloyds account increases its rate to 2.40%.
Five-year fixed-rate cash Isa
Skipton Building Society’s Fixed Rate Isa account currently tops our five-year fixed-rate cash Isa table, paying 3.00% from an initial deposit of £500.
Cash Isa tip of the week
If you haven’t used your Isa allowance by 5 April 2014, don’t assume that you can roll it over into next year. You can’t carry over any unused allowance into the next tax year and will lose it if you haven’t put the money into a cash Isa by deadline day. So act now if you haven’t used this year’s allowance.