Over £50 billion in cash held in fixed-rate ISAs is set to mature between January and April, with £36.4 billion in one-year accounts and £15 billion in 18-month to two-year accounts. Last year, savers rushed to utilize ISAs to avoid higher taxes on interest income, leading to greater growth in ISA balances compared to non-ISA balances. Although interest rates have decreased, Shawbrook Bank now offers competitive rates at 4.53% for one-year fixed ISAs. Experts advise savers to take advantage of their £20,000 ISA allowance and to act quickly on opening or transferring accounts to secure better rates.
More than £50bn of Isa’s cash held in fixed accounts is due to mature by the end of the tax year, new figures show.
Analysis of CACI data by Paragon Bank shows that £53.9 billion held within fixed rate cash Isas will mature between January and April.
This huge sum includes £36.4bn held in one-year fixed accounts and £15bn held in accounts opened with periods between 18 months and two years.
Last year, savers rushed to shield themselves from higher taxes on accumulated interest after HMRC figures showed breaches of the Personal Savings Allowance were expected to cost them £10.4 billion in the current tax year. This is around 10 times the £1.4 billion recorded in 2021. twenty two.
As a result, Isa balances grew far faster than non-Isa balances from January to October 2024, according to data from CACI, which compiles savings accounts from 40 major savings companies.
Isa cash balances increased by £38.5bn compared to £9.5bn in non-Isa accounts.
Cash Ether boom: savers rushed to open tax-efficient accounts last year to protect their income
“Last year was one of the busiest Isa seasons on record,” said Derek Sproling, managing director of savings at Paragon Bank.
“Paragon experienced a record-breaking day on the first business day of the new tax year.”
Are Fixed Isa Saver deals better or worse?
Savers looking to protect their funds when their accounts mature in the coming months could achieve better returns than a year ago, as interest rates have fallen across the board following the Bank of England’s benchmark rate cut. Not likely.
Shawbrook Bank currently tops the list of the best one-year fixed deals, offering savers an interest rate of 4.53% on balances over £1,000.
This is followed by Virgin Money, Close Brothers Savings and Secure Trust, all at 4.52%.
This marks a significant reduction in the interest rate on the January 2024 one-year fixed cash Isa, where Virgin Money was offering an interest rate of 5.25%.
Shawbrook Bank (5.01%), Dudley BS, Post Office Money, Kent Reliance and Punjab National Bank (5%) all offered significantly higher offers.
Similarly, two-year cash Isa fixed deals are not as generous as January 2024, with Hodge Bank and Castle Trust Bank offering 4.43% with the best deals currently on offer.
This is followed by Kent Reliance, Secure Trust and Close Brothers Savings at 4.42%.
However, savers on a two-year fixed in January 2023 will find better interest rates, with Barclays paying 4% on the best deal on offer.
Rachel Springall of Moneyfactscompare said: “Savers should aggressively chase the best rates at the start of the new year, especially as interest rates have fallen on both fixed and variable accounts over the past few months.” said.
“Those with maturing bonds would be wise to keep in mind that their returns are lower than they would have been if they invested a year ago, but those with five-year bonds would be wise to keep in mind that You will be happy to see that interest rates are now much higher compared to that.”
“Challenger banks are working hard to introduce healthy competition into the market with the aim of attracting capital for future lending.
“However, since the beginning of 2025 there has been a mix of increases and decreases across the top rate table.”
What to do when your cash is nearing maturity
Sproulling recommends savers whose cash Isas mature by April should use up their £20,000 Isa allowance by the end of the tax year.
If you’re considering opening an account or transferring your savings to benefit from higher interest rates, be sure to act early, Sproulling says.
“To better handle high volume transactions, savings providers can remove popular products from the market or make certain products available only to existing customers.
“So if savers are thinking of opening a new Isa or transferring their existing Isa balance to a new account this tax year, don’t delay.”
If you’re considering transferring your Isa balance, don’t withdraw the balance yourself. If you don’t make a withdrawal, you lose the tax benefits that come with an Isa.
Mr Sproul also advises savers to check how their income level affects their tax situation and how much Personal Savings Allowance (PSA) they are eligible for.
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 a PSA.
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