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 2012
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 2012 is £10,680 and this goes up to £11,280 for the new tax year of 2012/13 starting 6 April 2012. However, the limit for cash Isas is £5,340, going up to £5,640 for 2012/13.
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 is Cheshire Building Society’s Direct Cash Isa paying 3.06%, but this account doesn’t allow transfers in from other providers.
Marks & Spencer Money’s Advantage Isa and Virgin Money’s Easy Access Isa/E-Isa are worth noting as they allow transfers in and the headline rates (3.0% and 2.85% respectively) don’t include a bonus, so you don’t have to worry about the rate dropping off after 12 months.
Notice cash Isa
Notice cash Isa accounts used to pay a higher rate for locking up your money, but don’t tend to anymore. The Aldermore 60 Day Cash Isa Issue 2 does pay an attractive rate of 3.16%, but you’ll need to give 60 days notice to get at your cash.
One-year fixed-rate cash Isa
Aldermore’s one-year fixed-rate cash Isa is the best in the market at present paying 3.35% and allowing transfers in. The one-year fixed-rate Isas from Marks & Spencer Money and Metro Bank aren’t far behind with a rate of 3.25%.
Two-year fixed-rate cash Isa
The two-year fixed-rate cash Isa deals from BM Savings, Yorkshire Bank, Clydesdale Bank and the Post Office (all 3.60%) are the best products if you’re happy to tie your money up for two years.
Three-year fixed-rate cash Isa
Marks & Spencer’s Three-year Fixed Rate Isa account currently tops our three-year fixed-rate cash Isa table paying 3.75% on initial balances of at least £100. There then three Isa options paying 3.70%.
Four-year fixed-rate cash Isa
The Halifax Four-year Fixed Rate Isa Saver pays 4.1% and is the only four-year fixed-rate cash Isa deal in our tables at the moment.
Five-year fixed-rate cash Isa
BM Savings, Clydesdale Bank and Yorkshire Bank’s Fixed-Rate Isa account currently leads our five-year fixed-rate cash Isa table paying 4.25%. These Isas all allow transfers in from other accounts.
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.