More than £50billion of cash Isa savings held in fixed-term accounts is set to mature by the end of the tax year, according to new figures.
Analysis of CACI data by Paragon Bank shows £53.9billion held inside fixed-rate cash Isas will mature between January and April.
This huge sum includes £36.4billion which is held within a one-year fixed account alongside £15billion held in accounts opened with a term of between 18 months and two years.
Last year, savers rushed to shield increased tax on accumulated interest with HMRC figures showing £10.4billion is expected to be generated in the current tax year through the Personal Savings Allowance being breached – that is some 10 times the £1.4billion recorded in 2021/22.
As a result, the growth of Isa balances far outpaced non-Isa variants between January and October 2024, according to CACI’s data which compiled savings deposits of 40 leading savings providers.
Cash Isa balances increased by £38.5billion, compared to £9.5billion for non-Isa accounts.
Cash Isa boom: Savers rushed to open tax efficient accounts last year to shield their income
‘Last year was one of the busiest Isa seasons on record,’ says Derek Sprawling, Paragon Bank’s managing director of savings.
‘At Paragon we experienced a record-breaking day on the first working day of the new tax year.’
Will fixed Isa savers get a better or worse deal?
Savers looking to shield their money once accounts mature in the coming months are unlikely to achieve better returns than a year ago because rates have fallen across the board following cuts to the Bank of England’s base rate.
Currently, Shawbrook Bank tops the list of the best one-year fixed deals offering savers 4.53 per cent interest on balances over £1,000.
It is followed by Virgin Money, Close Brothers Savings and Secure Trust which all offer 4.52 per cent.
It marks a significant fall in the rate offered for a one-year fixed cash Isa in January 2024, when Virgin Money offered 5.25 per cent interest.
Shawbrook Bank (5.01 per cent), Dudley BS, Post Office Money, Kent Reliance and Punjab National Bank (5 per cent) all offered significantly more.
Similarly, two year cash Isa fixed deals are nowhere near as generous as January 2024, with the best deal currently on offer offering 4.43 per cent by Hodge Bank and Castle Trust Bank.
This is followed by Kent Reliance, Secure Trust and Close Brothers Savings offering 4.42 per cent.
However, savers who fixed for two years in January 2023 can find better rates, as the best deal on offer came from Barclays which paid 4 per cent.
Rachel Springall, of Moneyfactscompare, said: ‘Savers should be proactive to chase down the best rates as the New Year begins, particularly as rates have fallen across both fixed and variable accounts over the past few months.
‘Those with maturing bonds would be wise to keep in mind that returns are lower than then they invested a year ago, but those with a five-year maturing bond will be pleased to see rates are significantly higher now in comparison.
‘Challenger banks work hard to inject healthy competition into the market, with their intent to draw in funds for their future lending.
‘However, there has been a mix of both rises and cuts across the top rate tables since the start of 2025.’
What to do if your cash Isa matures soon
For savers whose cash Isa is due to mature before April, Sprawling recommends they use their £20,000 Isa allowance before the end of the tax year.
If you’re looking to open an account or transfer your savings to benefit from higher rates, make sure you act early, says Sprawling.
‘To better handle the high volumes, savings providers can take popular products off the market or make certain products available only to existing customers.
‘Therefore, if savers are thinking of openings new Isa this tax year or transferring an existing Isa balance to a new account, don’t leave it too late.’
If you’re considering transferring your Isa balance, don’t withdraw your balance yourself or you’ll lose the tax advantage that comes with an Isa.
Sprawling also recommends savers look out how their income level affects their tax status and how much of the Personal Savings Allowance (PSA) they are entitled to.
Basic-rate taxpayers can earn up to £1,000 of interest income tax-free, while higher-rate taxpayers can bank £500. Additional-rate taxpayers are not entitled to any of the PSA.
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