New ISA laws and higher rates reward savers

07 April 2008 / by Joy Tibbs
The laws governing ISAs changed on April 6, offering ISA customers the chance to save more in their account completely tax free. predicts that this may spark a surge in demand for ISAs in the near future. "Up to 80 per cent of ISAs are opened in the six weeks before the end of the tax year, but there are lucrative opportunities right now for early birds." said Kevin Mountford, head of savings at

The total tax-free allowance has risen just £200, but the maximum of this which can be invested in a Cash ISA is now £3,600, compared with £3,000 in the last tax year. Moreover, according to the comparison website, interest rates are now significantly better than last year's.

"Rates on cash ISAs are, on average, one per cent higher than this time last year and with market conditions being so strong for savers, there may have never been a better time to invest," says Mr Mountford.'s top five ISA choices in descending order are: Barclays Tax Haven ISA, Birmingham Midshires (Direct ISA Issue 2), Scarborough Building Society (Notice Mini Cash ISA), National Counties BS (Guaranteed Cash ISA) and Skipton Building Society (Fixed Rate Cash ISA).

Mr Mountford continued: "Those with a lump sum to put away should make the most of the new £3,600 tax-free allowance and put the money into a leading cash ISA, such as the Barclays Tax Haven ISA at 6.5 per cent.

"At 6.3 per cent, the Scarborough BS Notice Mini Cash ISA is the highest paying option if you want to transfer money in from another lower paying ISA."

Terms and conditions for the many different ISAs on the market vary, for example minimum deposits on the five mentioned above vary from just £1 to £1,000. And, while some allow customers to transfer money from another ISA account, others do not permit this.

For more information about the ISA changes, use's free Guide to ISAs.

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