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Cash Isa deals of the week 27 March 2014

Which? experts round up the best cash Isa deals

With the deadline to put money into your tax-free cash Isa account now just over a week 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 on 6 April 2014.

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 are Nationwide BS and Santander, with deals paying 1.60% on deposits starting from a minimum of £1 and £100 respectively. However, Nationwide’s Easy Saver Isa Issue 5 account doesn’t allow transfers in from other providers.

It’s worth noting that Santander’s Direct Isa Saver 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 tend to pay a higher rate for locking up your money, but be aware that some accounts don’t pay more than an instant access Isa, so compare the rates first.

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

Bank of Cyprus UK’s one-year fixed-rate cash Isa is the best in the market at present. It pays 1.75% and allows transfers in from other providers. The one-year fixed-rate Isa from Britannia isn’t far behind, at 1.71%.

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 deal from 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 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.

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