Toughest ISA season in living memory
The ISA season traditionally takes place between March and May each year, when providers will attempt to entice new savers in and attract people’s cash ISA allowance with eye-catching new deals. Over the last few ISA seasons, we have seen providers’ appetite for savers’ cash reduce and this has affected the new rates on offer, leading to some pretty disappointing results. However, it is safe to say that this year seemed one of the worst yet, with little to no improvements in the run up to the end of the tax year and many providers not even attempting to enter the ISA race.
As the end of the 2014/15 tax year approached and the new tax year began, we saw a smattering of new cash ISA deals appearing on the market, as you would expect. However, with many of those deals now taken off the market or replaced with lower paying versions, savers would have had to be on their toes to take advantage.
The run up to the new tax year saw most of the positive changes take place amongst fixed rate ISAs with providers such as Yorkshire Building Society and Virgin Money both making appearances in the best buy tables. It is fair to say that at this point there was virtually no movement amongst variable rate ISAs and certainly no table topping accounts being launched. Therefore those looking to use up their ISA allowance at the last minute may have been disappointed by the paucity of attractive new rates on offer.
Encouragingly, we saw some positive changes as we started the new tax year; some market leading variable rate ISAs were launched by Skipton Building Society and Shawbrook Bank. Plus most surprisingly we saw an increase in rate from West Brom Building Society that gave both new and existing savers a much better deal. However, each of these accounts have now been removed from sale, lasting just a few weeks. If savers were hanging on for a better option, unfortunately they may have missed out on these competitive accounts.
We also saw improvements amongst some fixed rate ISAs as Leeds Building Society, Aldermore and Shawbrook Bank were all new entrants in the best buy tables, although again, each of these have been either removed from sale now or replaced with lower paying versions.
The fact that you needed to act quickly to take advantage of some of these accounts, illustrated just how much people have been hoping for an ISA season bonanza. The Leeds Building Society 2 and 3 year fixed rate ISAs only lasted a week and Skipton Building Society’s market leading easy access ISA was unsurprisingly pulled from sale after just 11 days. The Limited Edition Cash ISA was certainly aptly named.
For those yet to act this tax year, there are still some good deals on the market, so take a look at our Variable Rate ISA and Fixed Rate ISA Best Buy Tables. In addition, there is still a chance that providers will make a late bid for the best buy tables with some eye catching new deals, like we have seen with Nationwide yesterday, so watch this space and we will let you know about if and when they happen.
Quite why providers waited to offer better variable rates in the new tax year and not in the run up to the end of the year, we’re not sure, but we were glad to finally see some better variable rate cash ISAs enter the market. Whilst it is disappointing that many of these accounts have disappeared, it just goes to show how important it can be to use your cash ISA allowance as soon as possible, rather than waiting until the last minute to deposit. By depositing early, you can earn tax free interest throughout the year and take advantage of some of the better deals.
Next year it could all change for savers, with the proposed personal savings allowance coming in from April 2016. However we believe that cash ISAs still play their part and savers might be wise not to forget about them. If you do not use your ISA allowance now, then you cannot use it in the future, thus reducing the overall amount you can hold tax free, which may not seem a problem at the moment, but if the savings landscape changes in the future, you may be glad of this tax free cash.