The clock is ticking for people to use up their ISA allowance (Image: Getty Images)
Savings providers are enhancing their products as the “golden window” to deposit funds into Isas emerges, with the market anticipated to intensify over the coming weeks. With the fresh tax year commencing on April 6, savers have merely weeks remaining to utilise their current annual ISA allowance, and they may also be seeking a new Isa arrangement when the new tax year begins.
HSBC UK introduced an incentive this week offering up to £500 cashback for depositing and/or transferring fresh funds into a cash Isa and/or a stocks and shares Isa this spring. Operating from March 9 to May 11, the promotion enables new and existing customers who deposit and/or transfer at least £20,000 into an eligible HSBC Isa to receive a cash payment of up to £500 in their bank account.
The tiered incentive is determined by the total amount of fresh funds added during the promotional period, which spans the tax year.
The promotion, which is subject to terms and conditions, means those depositing £20,000 to £49,999 can receive £150 into their HSBC current account; people depositing £50,000 to £99,999 will get £250; and those putting in £100,000 or more will receive £500.
Investment platform InvestEngine has also recently introduced bonuses for ISA and Sipp transfers and investments.
Andrew Hagger, a personal finance expert at Moneycomms.co.uk, said in other developments, Investec Save has raised the rate on its one-year fixed rate ISA to 4.20%, with Nationwide Building Society, Tandem Bank and Aldermore also launching new deals. Mr Hagger said: “The period from March to May is typically where we see providers battle it out for a slice of cash ISA balances, but this year the fight could be bigger than ever.”
With recent rises in swap rates, he added: “I expect to see the ‘best buy’ rates really hot up in the coming weeks.”
At present, individuals can deposit up to £20,000 annually into cash ISAs, stocks and shares ISAs, or a combination of both.
From April 2027, the annual adult cash ISA limit will be reduced to £12,000. Only those aged over 65 will maintain the full £20,000 annual cash ISA allowance.
The annual overall contribution limit into adult ISAs will stay at £20,000, potentially prompting some savers who hit the £12,000 cash ISA threshold to invest more in stocks and shares.
Alastair Douglas, chief executive of TotallyMoney, said: “Cash ISAs let you earn interest on your savings tax-free – and that’s what can make them a better option than a regular savings account – and even more so if you have a decent amount of cash put away.”
With smaller providers occasionally offering superior rates, he encouraged savers to compare options.
Mr Douglas also recommended savers examine terms and conditions, as some providers “will penalise you for withdrawing your money, and the longer the term, the bigger the hit”.
He added: “If you think you might need access to your cash, then it might be worth putting some into a competitive easy access account, so you don’t get caught out.
“It’s also worth considering lifetime ISAs and stocks and shares ISAs, but both come with different conditions and risks, so do your research before signing up.”