Published On: Mon, Mar 25th, 2019

Martin Lewis Money Saving Expert reveals best cash ISA – but act now for better savings


When it comes to saving your hard-earned cash, the right bank account can mean you see your savings grow in a far more efficient way. However, the option which suits you will likely depend on your income and financial situation. Today, Martin Lewis explained how setting up a cash ISA could be of interest to some. It came just a matter of days before the ISA year ends, which is the same as the end of the tax year, on April 5.

So, what is a cash ISA?

Martin explained it is a savings account which you can put £20,000 per tax year in, with the interest being tax free.

And, should you have the funds and want to generate as much interest as possible, it could be worth putting your savings into the account before the end of the tax year.

The £20,000 allowance renews on 6 April, so if you don’t use it before then, you’ll lose it, Martin said.

He continued: “You can put £20,000 in per tax year. So if you think about it you can put £20,000 now and then £20,000 in the next tax year in a couple of weeks.”

But, a cash ISA won’t necessarily be the go-to option for everyone, Martin said.

“That’s because in April 2016 the Personal Savings Allowance (PSA) was introduced, which now means taxpayers can earn a certain amount of interest on their non-ISA savings tax-free,” he spilled.

This means that basic 20 per cent rate taxpayers can earn £1,000 a year of interest tax-free, while higher 40 per cent rate taxpayers can earn £500 a year tax-free.

And, although this makes the tax-free perk of an ISA less relevant, those who pay the top 45 per cent rate in tax can save a chunk of tax with this account, Martin said.

However, when ISAs offer better interest rates than other savings accounts, it could be worth setting aside your money in one.

So, what are the current top interest rates at the moment?

Martin highlighted that Marcus Bank is offering a 1.5 per cent AER (including a fixed 0.15 per cent bonus for 12 months) – with savings beginning at £1.

Paragon Bank, which also has a minimum savings amount of £1, offers 1.45 per cent.

Alternatively, those with a 123 current account can get a 1.5 per cent easy-access ISA from Santander.

Meanwhile, if you don’t need to access your cash in the near future, a top fixed savings account from Shawbrook Bank could be of interest.

The bank’s one-year fixed normal savings is 1.97 per cent, while the one-year fixed cash ISA rate stands at 1.77 per cent.

If you can stretch to two years, the top two-year fixed normal savings is 2.28 per cent from Union Bank of India UK, while Charter Savings Bank boast the top two-year fixed cash ISA – with a rate of 1.95 per cent.

READ MORE: Martin Lewis urges you to act NOW to slash bills before April price hikes

To find out more and sign up to Martin Lewis’ weekly newsletter, visit www.moneysavingexpert.com/latesttip. Read more on top cash ISAs in the Money Saving Expert guide.

This Morning airs weekdays on ITV from 10.30am.



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