Which? Money provides its weekly look at the best deals out there to help you invest your new cash Isa allowance for 2014/15.
Cash Isa allowance for 2014/15
Each year you can deposit your savings into a cash or a stocks and shares Isa, or both.
The overall allowance has increased to £11,880 for the 2014/15 tax year, which started on 6 April 2014. The limit for cash Isas has risen to £5,940 from £5,760.
However, from 1 July 2014, the overall investment limit will be increased further to £15,000 a year. This limit can be made up of cash, or stocks and shares, or a mixture of both.
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 Santander, with its Direct Isa Issue 6, paying 1.60% on deposits starting from a minimum of £500. However, it’s worth noting that 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 period ends as the rate reverts to just 0.50%.
If you prefer an account which doesn’t come with a ‘teaser’ rate, Isas from NS&I, Nationwide and Virgin Money are worth considering as they all offer a rate of 1.50%.
Notice cash Isa
Notice cash Isa accounts tend to pay a higher rate for locking up your money, but be aware that many accounts don’t pay more than an instant access Isa, so compare the rates first.
Earl Shilton Building Society’s 90 Day Notice Cash Isa pays a rate of 1.80%, but you’ll need to give 90 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 £10.
One-year fixed-rate cash Isa
Britannia’s one-year fixed-rate cash Isa is the best in the market at present. It pays 1.71% and allows transfers in from other providers. The one-year fixed-rate Isas from Halifax, Krbs and Tesco Bank aren’t far behind, all at 1.65%. Halifax also offers an 18-month fixed rate Isa, paying 2.00%.
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
Halifax, Skipton Building Society and United Trust Bank currently top our three-year fixed-rate cash Isa table, all paying 2.25%. The deals from Bank of Cyprus UK and TSB follow closely behind, both at 2.10%.
Four-year fixed-rate cash Isa
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 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.