Anyone with a cash ISA has been warned they have three months to act. Research by Paragon Bank shows a staggering £53.9 billion in Cash ISAs will reach maturity between January and April, with £36.4 billion of that amount held in one-year fixed-term accounts.
Derek Sprawling, savings managing director at Paragon Bank, said: “Last year was one of the busiest ISA seasons on record, and at Paragon we experienced a record-breaking day on the first working day of the new tax year.”
He added: “Over two-thirds of cash ISA savings set to mature by the end of April are in one-year accounts. These savers will likely observe a slight decrease in market rates compared to the same period in 2024, while those with funds maturing in longer-term accounts should benefit from higher rates.”
READ MORE 16 counties in England face MORE snow this week with ‘five inches’ hitting
Mr Sprawling urged savers to use their Cash ISA allowance or use it when the new tax year starts again on April 6. He said: “Each individual aged 18 or over benefits from a £20,000 ISA allowance every tax year from the Government.
“This means that they can save this amount in an ISA each tax year and never pay a penny of tax on interest generated from the balance for life.” He added: “Any unused allowance in the tax year will be lost as unused allowance cannot be rolled over into the next tax period.”
He explained: “ISA season is extremely busy for savings providers, with high volumes of account openings and transfer requests. 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 opening a new ISA this tax year or transferring an existing ISA balance to a new account, don’t leave it too late.”
He said: “A flexible ISA allows you to withdraw money from your ISA during a tax year without impacting your allowance for that period. For example, if you have £20,000 saved in that tax year’s ISA and withdraw £5,000, you can top it back up by £5,000 to ensure your allowance is utilised.
“Some ISA providers allow you to choose from a range of ISAs, not just a single type. For instance, you may wish to allocate some funds into a fixed-rate ISA while retaining access to some of your cash for emergencies.” He added: “Transferring an ISA balance to benefit from higher rates is simple, with most providers facilitating the process. You can transfer all or part of your ISA savings, but remember not to withdraw the funds yourself as you will lose the tax advantage of the ISA.”