Grab a last minute ISA before tax year end

With the end of 2012/13 tax year just over a week away, MoneySupermarket urges savers who have not taken advantage of this year's ISA allowance to move quickly and  look for the latest deals on offer, or miss out for good, especially if they have existing ISA funds languishing on low rates.
 
The comparison site has seen a 21 per cent increase in the number of people looking for ISAs through its site compared to March 2012. However, unlike in previous years, more people are opting to fix their ISAs rather than take out a variable rate deal, largely due to the average rates on fixed rate ISAs being higher than those on easy access cash ISA products. The average rates on the top 5 fixed rate ISAs is currently 2.99 per cent, 0.58 percentage points higher than the average rates on the top 5 easy access ISAs, however, you will have to lock you money away for a longer period to take advantage.
 
Kevin Mountford, head of banking at MoneySupermarket, said: "It's the final countdown until the end of the current tax year on 5th April, and consumers could still make the most of the tax efficient options for their savings. With a maximum cash ISA allowance of £5,640 available, you'd be throwing money away to the tax man if you didn't take advantage. A number of providers have announced new rates in the last few weeks, and finally we're seeing more competitive rates emerge. Due to falling savings rates, we are now beginning to see more people opting for fixed rate ISAs over easy access cash ISAs. While the rates on these products are more generous, savers need to be prepared to lock the money away as they cannot access it during the term of the bond. For those who cannot afford to lock money away, you can still get rates five times that of base rate on easy access Cash ISAs.
 
"Although you may not have enough spare cash available to invest in the current tax year, if you have any ISA funds from previous years, it is worth checking the rate you are currently being paid and be prepared to switch those funds to an account that allows transfers of existing ISA funds in. However, if you do this, don't just withdraw the money from your existing ISA as it will lose its tax free status. Instead you need to follow the ISA transfer process which your new provider will help you with, but with time running out until the end of the tax year it is important to make sure this can be done before the deadline.
 
"Although this tax year isn't quite over, it is also worth planning ahead to the next tax year. Those who invest the full cash allowance at the start of the new tax year will benefit from the tax benefits for the entire year, ensuring you get the best returns on your savings."