Savers looking to use up this years tax free individual savings accounts (ISA) allowance are in search of the best ISA rates before the new tax year begins.
All UK savers are eligible to an annual tax free savings allowance that can be used from 6 April to 5 April the following year.
Allowances cannot be overlapped across several tax years’, so the message to savers is ‘use it or lose it’.
Last year, the ISA allowance was raised to £10,200 from £7,200 for all those aged 50 and over, which was later rolled out to everyone else at the beginning of the current tax year.
Another increase to this allowance is planned for the next tax year which will become effective as of 6 April, pushing the amount at which savers can save without paying tax on their returns to £10,680.
The Bank of England base rate has continued to stay at it’s record low level of 0.5%, which has had a negative effect on interest rates offered on savings accounts.
However, ISA providers are expected to boost rates on some accounts to encourage savers to open an account with them.
The best rates on ISAs are currently paid to those that are willing to lock their funds away for a fixed period of time at a set rate – much like the more traditional fixed rate bond. These fixed rate ISAs offer an effective incentive to leave savings untouched.