Savings update: Cash Isa rates edge up as tax year end approaches

15 March 2018

Cash Isa rates continue to edge up slowly as we approach the end of the tax year on April 5. 

Savers can put £20,000 into a cash Isa this tax year and pay no tax on the interest they earn.

Virgin Money has upped the rate on its one-year fixed rate cash Isa to a top 1.5%.  The account is on offer online, through its branches or you can open it through the post. The best deal for two years is a slightly higher 1.67% from Paragon and Chartered Savings Bank followed by Virgin Money at 1.66%. 

In the Cash Isa market, the Nationwide Loyalty Single Access Isa pays a top 1.4%.  But it is only open to those who have been a member of the building society for at least 12 months and you are limited to making just one withdrawal a year from your account. The building society’s Single Access Isa, open to all, pays 1.3%.

For savers who want an easy access cash Isa with no withdrawal restrictions, Virgin Money’s Easy Access Cash Isa issue 23 pays 1.21% and Nottingham Building Society’s online Easy Access Isa is 1.2%. The AA, Paragon and Sainsbury’s Bank all pay 1.16%. 

On taxable easy-access accounts ICICI Bank Hi-Save Bonus Saver currently pays a top 1.35%. But the rate includes a 0.7 percentage point bonus payable until the end of January next year.    

Top accounts with no bonus include French-owned RCI Bank Freedom account at 1.3% with no withdrawal restrictions. Virgin Money Double Take E-Saver 4 also pays 1.3% but limits you to making just two withdrawals a calendar year. Ford Money Flexible Saver at 1.22% and Paragon Limited Edition Easy Access account at 1.21% are also among the top payers. 

On taxable fixed-rate bonds, the best one-year rate comes from Investec Bank at 1.9%, but only for those depositing £25,000 or more. Elsewhere Ikano Bank pays 1.85%, but remember your savings here are covered by the Swedish deposit protection scheme, not the UK’s FSCS.

For 18 months you can fix at 1.95% with Investec Bank or 1.9% with Metro Bank, Masthaven or PCF Bank

The top two-year rates come from Swedish-owned Ikano Bank at 2.1% and from both OakNorth Bank and Paragon at 2.09%. 

Savings accounts to beat inflation

To beat inflation compromises need to be made as all of the small number of regular savings accounts that pay more than inflation require savers to have a current account with the provider.

Moneywise keeps tabs on the savings market has found there are accounts that currently beat inflation.

This article was written for our sister magazine Money Observer.

Read more on savings and Cash Isas on Moneywise

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