Last chance to top up this year’s ISA

Mar 30, 2011   //   by sam   //   Banking and Savings Accounts, Latest Product Updates  //  Comments Off on Last chance to top up this year’s ISA

Piggy Bank, Half full

With this years tax year ending on Tuesday (5 April), savers have been reminded that they have until this date to use up the remainder of their tax free ISA allowance – or they will lose it.

However, as tempting as it is to leave this until the last minute it is not advisable, as many banks offering the best ISA rates will soon run out of budget and be forced to pull these high paying accounts before the deadline.

All savers in the UK currently have an annual tax free savings break of £10,200, half of which can be set aside into cash ISA and the rest (or up to the full £10,200) into investment ISAs.This limit will rise by £480 in line with inflation at the beginning of the new tax year (6 April) to £10,680, so savers will soon be able to put up to £5,340 into cash ISAs every year.

There are a number of different types of cash ISAs available on today’s savings market, each coming with a different set of rates and restrictions, so the rate you get will depend on which account you choose based on your saving needs.

If you are happy to lock your savings away for an extended period of time you can generally qualify for higher rates. However, these rates are not affected by changes made to the Bank of England base rate, so if   rates go up across the board you may find yourself locked in at a rate that falls below average.

This can of course work the other way, so if savers can position themselves with a decent ISA when the base rate peaks, they will enjoy higher rates than those offered to new customers either for the duration of the account, or until rates begin to increase.

Halifax currently offers an instant access ISA at the top end of the ISA tables, paying a rate of 3%. The Halifax ISA allows customers to make up to make up to 4 withdrawals per year and existing cash ISAs can be transferred across.

Nationwide is also offering 3.10% on its instant access cash ISA. The Nationwide ISA comes with no withdrawal restrictions and gives account holders the ability to transfer existing cash ISAs.

However, this ISA is only available to existing Nationwide customers, so if you don’t currently bank with Nationwide you would need to open a bank account or savings account with the building society.

If you are keen to make the most of your tax free savings allowance you should consider the share dealing ISA option. These accounts allow investors to benefit from 100% tax free returns on earnings.

Share dealing accounts offer the potential to provide far greater returns than any of their cash counterparts, but with any stocks and shares investment comes an element of risk, so you must be ready to take a gamble.

More and more banks and building societies are now offering share dealing accounts, many of which incorporate the ISA wrapper, so there is an ever-growing array of choice for investors.

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