With the deadline to put money into your tax-free cash Isa account now just over a month 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 and this goes up to £11,880 for the new tax year of 2014/15 starting 6 April 2014. The limit for cash Isas this year is £5,760, going up to £5,940 for 2014/15.
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.
Darlington Building Society’s Cash Isa is worth considering as it allow transfers in from other providers and offers a competitive rate of 1.70%. Furthermore, this account doesn’t includes a bonus, so you won’t have to worry about the rate dropping off after an initial 12-month period.
Notice cash Isa
Notice cash Isa accounts used to pay a higher rate for locking up your money, but at the moment, none of them pay more than the top instant access cash Isa rate.
For example, Mansfield Building Society’s 30 Day Notice Cash Isa pays an attractive rate of 1.75%, but you’ll need to give 30 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. It pays 1.85% and allows transfers in from other providers. The one-year fixed-rate Isas from Bank of Cyprus, Leeds Building Society and Tesco Bank aren’t far behind, at 1.75%.
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
Principality Building Society and United Trust Bank’s fixed rate Isa accounts currently top our three-year fixed-rate cash Isa table. They both pay 2.25% on initial balances of at least £500 and £5,000 respectively.
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
Skipton Building Society’s Fixed Rate Isa account currently tops our five-year fixed-rate cash Isa table, paying 3.00%. This account is closely followed by Principality Building Society, paying 2.90%.
Cash Isa tip of the week
You’re only allowed to pay new money into one cash Isa per tax year, but you can hold multiple cash Isas from previous tax years. Don’t automatically put money into the same Isa as you had last year though, as it may not be offering a competitive deal this year.
Also, it’s worth checking the rate you’re getting on previous years’ cash Isas – if the rate is disappointing, switch them to an Isa that allows transfers in.