Have you saved more than €20,000? Here are the best THE SAVINGS GURU accounts you can open right now

Good news for those longing to use cash Isas as savings: interest rates are finally going up and the gap between regular accounts and cash Isas has narrowed to the point where there isn’t much in between.

This makes cash a must for any saver because you can protect your interest from the tax authorities.

Competition intensified last week when Aldermore bank unveiled a one-year fixed rate Isa of 5 per cent. And Shawbrook raised its interest rate to 5.01 percent yesterday, quickly followed by OakNorth at 5.02 percent.

Easily accessible rates are also looking brighter now that new providers are offering rates above 5 percent.

The rates paid on these accounts no longer lag so far behind taxable accounts that they are not worth it.

There are now more than four million accounts where savers are at risk of paying tax on interest, an increase of almost a million in six months due to higher interest rates.

Now basic rate taxpayers can take advantage of the personal savings allowance of £1,000 in interest on ordinary accounts without paying tax. For higher rate payers this is £500.

At 5 percent rates, you’ll pay tax if you have more than £20,000 in ordinary accounts as a basic rate taxpayer, or £10,000 for higher rate payers. Your 5 percent is only worth 4 percent if you’re the former, and 3 percent if you’re the latter.

The message is clear: use your £20,000 Isa allowance before April 5 so your interest is tax-free.

So where to start? First of all, don’t go to your checking account provider; the rates will be lousy.

Just look at them: Barclays 1.66 per cent, NatWest 1.75 per cent, Halifax 1.45 per cent, Santander 1.7 per cent, Lloyds 1.4 per cent on its easily accessible cash Isas. HSBC pays 3.2 percent, but only with the right current account and if you top up your Isa annually.

The one exception is Virgin Money, which pays out 4.76 percent and an unbeatable fixed rate of 5.25 percent if you commit your money for a year.

The big banks charge higher rates, but you will have to move your money within a year.

Halifax pays 4.1 per cent on its Isa Bonus Saver if you make fewer than four withdrawals. But after a year your money is transferred to the Instant Isa Saver, where you pay 1.45 percent.

Other banks and building societies pay much more. The best include Zopa (5.08 per cent), Marsden Building Society (5.05 per cent) and Charter Savings Bank (5.03 per cent).

On one-year fixed rate accounts, OakNorth’s 5.02 per cent is the highest, with a minimum of £1 – or you can take a monthly interest rate of 4.91 per cent.

Interest rates on two-year fixed rates are lower because the general interest rate level is likely to fall. If prices fall, you may win by opting for a longer-term product, such as Zopa (4.67 percent), Hodge Bank (4.62 percent) and Furness BS (4.6 percent).

Hot account is launched by Paragon Bank

Paragon Bank has launched a new version of its Double Access Account. It offers 5.16 percent, making it the best payer for easy-to-access accounts that limit annual withdrawals.

Coventry BS Triple Access Saver (Online) Issue 3 scores just 5.08 percent. The interest is variable and taxable.

I don’t include accounts that limit the number of times you withdraw your money in my easy-to-access best buy tables. But I will keep you informed.

The Paragon Double Access allows two recordings per year. If you earn more, the rate drops to 1.5 percent. And you have to keep € 1,000 in there.

Older versions of the Paragon account, closed to new savers, pay different rates, so switch to the new one if you earn a lower rate. Number 1 pays 4.75 percent and number 3 5.25 percent.

If you have Coventry’s first or second number, stick with them for their rates of 5.20 percent and 5.15 percent respectively.

Sy.morris@dailymail.co.uk

See the best cash Isa rates in our savings tables