Use it or lose it!
If you haven’t used your 2016/17 cash ISA allowance yet, there is still time, but the later you leave it, the less choice you may end up with. You can pay up to £15,240 into a cash ISA by the 5th April, if you haven’t paid into an ISA yet this tax year and the bottom line is; if you don’t use it, you will lose it!
Traditionally, providers launch competitive cash ISA rates at this time of year to pick up the deposits of those who have not acted yet, though we have seen this tradition decline over recent years as less and less providers bring out attractive new deals.
Providers also start to withdraw accounts from the market the closer we get to the deadline to cope with increased demand and to ensure that all applications are opened and funded in time. In fact, this week, we have already seen Aldermore withdraw its cash ISA range from the market, with a new range to be launched when we move into the 2017/18 tax year.
If you are debating whether to pay into a cash ISA this tax year, it remains a valuable part of an effective savings strategy, offering tax-free interest on the full balances held. Over the years, since the inception of the ISA in 1999, sizeable balances will have been accrued, if the ISA allowance has been utilised each tax year and by making the most of your allowance, you can accrue similar amounts going forward, especially as the allowance has increased so much. The key point to note is that if you don’t use your ISA allowance, you will lose it forever, reducing the amount you can save tax-free in the future.
So, if you are looking to make the most of your cash ISA allowance, here are some of the best options available at the moment. But remember, don’t leave it too long or you could miss out!
If you are looking for easy access to your ISA money, the top rate on the market currently is from Coventry Building Society at 1.05% tax free/AER.
For more information on this account or for further options, take a look at our Variable Rate Cash ISA Best Buy Table.
You can sometimes get a higher return on your cash ISA by tying up your funds for a fixed period of time. Interest rates are fixed for up to five years, though you cannot normally access your funds within the period, unless you pay a penalty.
For a shorter term, Bank of Cyprus UK pays 1.10% tax free/AER for 1 year. For 2 years, Principality Building Society pays 1.26% tax free/AER and for 3 years, Paragon Bank pays 1.40% tax free/AER. For those looking for a longer term, Paragon Bank pays 1.75% tax free/AER, which is currently the best rate for 5 years, the longest term available. Available only to those transferring in ISAs, United Trust Bank pays a higher rate of 1.85% tax free/AER, but this would not be suitable if you are looking to pay in this year’s allowance before the deadline.
For more information and options, click here for our full Fixed Rate Cash ISA Best Buy Tables.
So, there are still plenty of options available if you are looking to pay in this tax year’s allowance before the deadline. If you need help picking a suitable cash ISA or need any assistance with your savings, call us on 0800 321 3581, we’d love to hear from you.