Nationwide Building Society is launching two new fixed rate ISAs at the start of the new financial year today. The one year fixed rate ISA offers an interest rate of 4.1 percent while the two-year fixed rate ISA comes with a rate of 4.25 percent.
Both new and existing customers can open an account online, via the mobile app or in one of the building society’s branches.
Savers can transfer in funds and will earn interest as soon as the transfer application is received as long as the funds can be moved freely and are not subject to a notice period.
Tom Riley, director of Retail Products at Nationwide Building Society, said: “Cash ISAs are an important product for savers, as interest doesn’t count towards the personal savings allowance; it is a tax-efficient way to save for the short or long term.
“That’s why, to start the new tax year, we’re launching two fixed-rate ISAs offering some of the most competitive rates currently available on the market.”
ISAs also have the benefit that a person does not pay tax on any interest earned or on any withdrawals.
Nationwide also recently increased the rate on its One Year Triple Access Online accounts, with both the ISA and Saver accounts now paying three percent.
Customers can make up to three withdrawals over the 12-month term.
Any other withdrawals will make the interest rate drop to one percent for the rest of the term.
Mr Riley said: “We know that not everyone will want to lock their money away because they may need access to their savings.
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“That is why we also recently increased the rate on our One Year Triple Access Online ISA to three percent”
A person can save up to £20,000 in ISAs over any financial year. This can be saved into either cash ISAs, stocks and shares ISAs, innovative finance ISAs or Lifetime ISAs.
Sarah Coles, head of personal finance at Hargreaves Lansdown, urged savers to deposit funds in ISAs “as soon as possible”.
She explained: “By investing early, you get an extra year of protection from tax. If you hold investments outside an ISA, the fact that the dividend tax allowance has been halved, to £1,000, means investors run the risk of paying tax on their dividends far earlier in the year.
“By switching them into an ISA using the Bed and ISA process, they’re protected from this tax immediately.”
From today, the capital gains tax allowance is being reduced from £12,300 to £6,000, providing another incentive for Britons to save into their ISAs early in the financial year to help keep their tax bill as low as possible.
Ms Coles commented: “The slashing of the capital gains tax allowance to £6,000 means investors planning to realise gains early in the tax year risk busting their allowances.
“Switching into an ISA on day one gives you the freedom to sell what you want when it makes the most sense for your finances, without thinking about tax.
“Starting early gives you the opportunity to set up regular monthly payments into a stocks and shares ISA each month, and automatically spread your investments across the tax year.
“By drip feeding your money into stock market ISAs, you will take advantage of market falls, through what’s known as pound cost averaging.”
She suggested a person investing a fixed sum each month could also purchase more units when the fund’s value falls, meaning they stand to make good profits when its value increases again.
Ms Coles said a saver can invest as little as £25 a month in regular payments, which can add up to a sizeable “nest egg” over the course of a year.
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