Savers are being urged to make the most of their annual personal ISA allowance before it resets on Monday, April 6. Sunday, April 5, is the last day to maximise this year’s £20,000 allowance for the tax-free accounts.

With little over a week before the end of the HMRC tax year, TotallyMoney has explained five ways to make the most of ISA season. It said this came as several providers offering an inflation-beating four per cent or more interest on ISA products and cash ISA deposits grew by 67% in 2023/24, with £69.5 billion deposited across 9.94 million accounts.

It also explained why this year was important, as from April 2027 cash ISA allowances will be cut to £12,000, meaning the current and next tax years are the last to shelter the full £20,000. From next year, the overall limit will remain £20,000, but the £8,000 difference will have to be placed in a different type of ISA, such as a stocks and shares account.

TotallyMoney spokesperson James McCaffrey said:”Right now is peak season for ISAs, with providers improving rates as they battle it out to attract customers. And with the ISA allowance being cut to £12,000 from April 2027, anybody who can afford to should make the most of the full £20,000 while they can.

“When shopping around, don’t ignore the smaller providers, as they’ll often be providing the best rates – while you’ll get the exact same protection as you would with the high street banks under the Financial Services Compensation Scheme.”

Andrew Hagger, personal finance expert at Moneycomms.co.uk, said: “If you’re looking to open a Cash ISA this tax year, you need to get your skates on as some savings providers won’t accept new accounts right up until April 5 – so try to get yours open in the next seven days to avoid missing out.

“Be wary of big banks offering cash incentives to switch old ISA balances – it may seem tempting, but often high street banks pay a poorer rate of interest, so your cash bribe may soon evaporate in real terms.”

James McCaffrey’s five ISA season tips

Use it or lose it

James said: “ISA allowances reset on April 6 and what you don’t use before then, you’ll lose. So, if you’re sitting on savings or you’ve been meaning to open an ISA for a while, now’s the time to make a move. You can put up to £20,000 across all ISA types this year, and any interest earned is tax-free.”

Check your existing rates

James said: “If you opened a cash ISA or savings account last year or before, check the rate you’re now being paid. Banks and building societies regularly cut rates in line with the Bank of England or after the introductory period, so you might be earning less than you think.

“Transferring your ISA using the official process is as easy as filling out a form and it protects you from losing your tax-free status on previous years’ contributions.”

This year matters more than most

James said: “From April 2027, cash ISA allowances will drop to £12,000, meaning you have just two windows to shelter the current £20,000 limit, while tax on savings will increase in April 2027, making your ISA even more valuable.”

James advised: “ISA providers will include terms and conditions within the agreement, which might mean that the headline interest rates disappear after a year, restrict you from accessing your own money, or punish you if you do. So, make sure you pick a provider that’s right for you, and not just the one paying the highest rate.”

You can open more than one

James explained: “Since April 2024, you’ve been able to open more than one cash ISA in the same tax year. That means you can ‘staircase’ your ISA savings – spreading your cash between accounts with different fixed-terms of one, two and three years and giving you penalty-free access and the option to reinvest as each account matures.”