Early bird savers can take advantage of new ISA allowance Go compare with our comparison table

Early bird savers can take advantage of new ISA allowance

06 April 2011 / by Paul Dicken

Early bird investors and savers can take advantage of the new higher ISA allowance and a full year of earning interest with the start of the new tax year.

Many banks and building societies have kept their promotional deals – introduced at the end of the last tax year – available for the beginning of the 2011/12 tax year. The cash ISA allowance for 2011/2012 is £5,340.

A leading fixed-rate cash ISA from Natwest pays 3.70 per cent AER. The 3 Year Fixed Rate Cash ISA is available for deposits of £1,000 and upwards. Transfers from other ISAs are also allowed.

The Royal Bank of Scotland 2 Year Fixed Rate Cash ISA offers a shorter term fixed rate account, with a minimum deposit of £1,000 and transfers from existing ISAs allowed. The account has an interest rate of 3.20 per cent AER.

Shorter term fixed rates might appeal to savers who expect the Bank of England to raise interest rates at some point this year, with some of the instant access cash ISAs still available offering attractive variable rates.

Instant Access


One of the leading accounts still available to ISA savers using their new allowance is the Halifax Cash ISA Direct Reward, on deposits from £1 the account offers a three per cent AER variable interest rate.

Compare more leading cash ISAs available for the 2011/12 tax year »


Bonus rates

With many savers taking advantage of the higher cash ISA rates introduced as the last tax year came to an end, the consumer group Consumer Focus has urged people to check the rates on variable rate ISAs in coming months to ensure bonus rates have not expired.

Mike O’Connor, chief executive of Consumer Focus, said: “Putting a reminder in your calendar now to shop around for a better cash-ISA in a year’s time is essential if you want a half-decent return. Unless you check your rates each year you’re likely to end up with a poor return on your savings.”

Consumer Focus say that consumers are missing out on millions of interest each year by not switching their account to one with a better interest rate.

‘Even customers who do switch often fail to make the most of their money each year by not switching their account again before the attractive ‘teaser rate’ they signed up to ends,’ the organisation said.

Stocks and shares ISAs

Barclays Stockbrokers has said a third of its ISA customers are planning to invest a lump sum in their ISA now to make the most of their annual allowance of £10,680.

Barclays Stockbrokers vice president, Catherine Penny, said: “When it comes to investing tax efficiently, it can be beneficial to take full advantage of tax allowances early in the tax year – ideally as soon as it begins. Investors who use their ISA allowance at the start of the tax year have the opportunity to shelter an extra year’s returns from tax, compared to someone who chooses to invest on the last day of the tax year.”

Penney said with interest rates remaining low and inflation high, investors prepared to accept additional risk were holding investments in their ISA to access ‘potentially better returns’.

A wide range of investments funds and structured investments are available as stocks and shares ISAs for the 2011/12 tax year.

Compare leading ISA investments »

Fixed Rate Cash ISAs
ProviderAccountInterest RateTermApply
1.00%2 YearApply Now >
Earn 1.00% tax free/AER fixed for 2 years. Open with £500. Transfer in ISAs held elsewhere - no limit
0.95%1 YearApply Now >
Earn 0.95% tax free/AER fixed for 1 year. Open with £500. Transfer in ISAs held elsewhere - no limit
1.40%3 YearApply Now >
1.40% gross/AER fixed for 3 years. £1,000 minimum opening balance. Withdraw cash early if you need to (subject to loss of interest).
1.20%2 YearApply Now >
1.20% gross/AER fixed for 2 years. £1,000 minimum opening balance. Withdraw cash early if you need to (subject to loss of interest).
1.10%1 YearApply Now >
1.10% gross/AER fixed for 1 year. £1,000 minimum opening balance. Withdraw cash early if you need to (subject to loss of interest).