Money expert Martin Lewis has issued a message to everyone with a Cash ISA before this weekend as he told savers: use them or lose them.
Cash ISAs have been subject to much scrutiny in the past few months, with rumours that Chancellor Rachel Reeves was set to cut the limits on the amount that can be deposited into the tax-free savings accounts from the current £20,000 down to as little as £4,000. No such change came in the spring statement, though the government has refused to rule out changing them later on, such as in the Autumn Budget later this year.
For now, Cash ISA limits remain unchanged and it means you have a few days left to max out your current Cash ISA before another £20,000 limit is brought in at the end of this week.
Cash ISAs allow you to save up to £20,000 either in one or multiple ISAs within a given tax year, without paying any tax on the interest generated. They are especially useful for people with lots of savings, where the interest generated would break past your Personal Savings Allowance, or for those on high incomes who have lower or no Personal Savings Allowance. The Allowance starts off at £1,000 of interest for a typical 20% taxpayer, is cut to £500 interest for those earning £50,270 and is removed for those on £125,000 or more.
But interest generated inside a Cash ISA does not get taxed, and you can transfer in previous years’ of allowance to have hundreds of thousands of pounds inside them without paying any tax on the interest.
Money expert Martin Lewis, writing on his MSE website, says there is not long left to pay into your current Cash ISA and max out the £20,000 limit before the limits are reset on Sunday, April 6.
He said: “Prepare to pop the champagne corks and light the fireworks, 6 April is New Year (for tax at least) when all ISA and tax allowances reset. Yet that also means you’ve not long left to use this year’s allowance, and it’s best to do that, just in case you’ll be able to fill next year’s too.
“When you put money in an ISA, it stays tax-free there year after year. So, if you’re lucky enough to have enough, you can fill up this year’s now, add another £20,000 on 6 April, and a year later the same again etc – protecting an ever-increasing pile from tax. No wonder some who’ve maxed it out every year now have £100,000s in ’em.”
Right now, the best easy access Cash ISA is from Trading212, which offers 4.5% boosted by 0.75% up to 5.25% right now.
Tembo also offers a 4.8% rate, while the Post Office offers 4.4%.
For a one year fix (which means the rate cannot be lowered for 12 months, but you cannot get the money either), you can go to Cynergy for 4.49% or Castle Trust for the same rate.
