THE BEST CASH ISA RATES – WITH A YEAR LEFT UNTIL £20,000 ALLOWANCE IS CUT

The new tax year started on 6 April, meaning savers’ ISA allowances reset and they can squirrel another £20,000 away without paying a portion of the gains or interest they make to HMRC.

Every tax year, savers can put £20,000 into ISAs – either in cash savings or stocks and shares.

If they make interest on their savings, they do not pay income tax, and they also do not pay capital gains tax on any gains made from investing.

For most savers, this is the last tax year they will be able to put the full £20,000 away into cash.

From April 2027, the total ISA allowance stays at £20,000 each tax year, but if you’re aged 18-64 you will only be able put £12,000 into a cash ISA each tax year.

Here’s how the best rates look at the moment.

These easy-access accounts can see the rates go up or down, but crucially, you can remove your cash. They are the most flexible type of account.

Fixed-rate ISAs give you a set interest rate for a fixed period of time, but you can’t withdraw your money without being hit by a charge, so they are less flexible.

What might happen to savings rates in the future?

Savings rates have already been climbing over the past few weeks.

At the start of April, the Moneyfacts average savings rate stood at 3.41 per cent, compared to 3.32 per cent at the start of March.

The climb is because banks tend to increase the returns on their accounts when it looks like the Bank of England (BoE) will raise interest rates.

At the start of the year, the consensus view was that the rate would fall steadily but that assumption has since changed.

Traders now expect the BoE rate to rise this year as a result of the conflict in the Middle East, which has had a large impact on oil prices and inflation.

What about stocks and shares ISAs?

You don’t have to put your new ISA allowance into cash, with an alternative to this being stocks and shares ISAs.

With this type of ISA, you put your money into funds, which are pre-selected shares and bonds essentially a loan to a company or a government, or individual shares and bonds.

With this type of ISA, the return can be better than with cash, but your money can go up or down, so a general rule is to use it on a five-year horizon or more.

The Chancellor, Rachel Reeves, has spoken of trying to foster “a culture of investing”, which is why from next tax year, those using ISAs will have to put at least some of their money into the stocks and shares version of the account.

2026-04-07T06:34:03Z