Cash Isa rush predicts £54 billion of fixed-rate tax-free money will mature in coming months – here’s why you need to act early…

More than £50 billion of Isa cash savings in term accounts will expire by the end of the tax year, according to new figures.

Analysis of CACI data by Paragon Bank shows that £53.9 billion of fixed-rate cash will mature between January and April.

This huge sum includes £36.4 billion held in a one-year fixed account, in addition to £15 billion in accounts opened with terms of 18 months to two years.

Last year, savers rushed to shield from increased tax on accumulated interest, with HMRC figures showing that £10.4 billion is expected to be generated from breaching the Personal Savings Allowance in the current tax year – that’s around 10 times the £1.4 billion recorded in 2021. 22.

As a result, growth in Isa balances easily outpaced non-Isa options between January and October 2024, according to CACI data, which aggregated savings deposits from 40 leading savings providers.

Cash Isa balances rose by £38.5 billion, compared to £9.5 billion for non-Isa accounts.

“Last year was one of the busiest Isa seasons ever,” says Derek Sprawling, savings director at Paragon Bank.

‘At Paragon we had a record day on the first working day of the new tax year.’

Will regular Isa savers get a better or worse deal?

Savers looking to protect their money once accounts mature in the coming months are unlikely to see better returns than a year ago as interest rates have fallen across the board following cuts to the Bank of England’s base rate.

Currently, Shawbrook Bank tops the list of the best one-year fixed deals, with savers getting 4.53 per cent interest on balances over £1,000.

It is followed by Virgin Money, Close Brothers Savings and Secure Trust, all offering 4.52 per cent.

It marks a significant drop from the interest rate offered for a one-year fixed cash Isa in January 2024, when Virgin Money offered an interest rate of 5.25 percent.

Shawbrook Bank (5.01 per cent), Dudley BS, Post Office Money, Kent Reliance and Punjab National Bank (5 per cent) all offered significantly more.

Similarly, the two-year cash Isa fixed deals are not nearly as generous as those from January 2024, with the best deal currently on offer offering 4.43 per cent from Hodge Bank and Castle Trust Bank.

This is followed by Kent Reliance, Secure Trust and Close Brothers Savings with a share of 4.42 percent.

However, savers who signed a two-year fixed contract in January 2023 could find better rates as the best deal on offer came from Barclays, which paid 4 per cent.

Rachel Springall from Moneyfactscompare says: ‘Savers should be proactive in looking for the best rates at the start of the new year, especially as rates have fallen on both fixed and variable accounts in recent months.

‘Those with maturing bonds would be wise to bear in mind that yields are lower than they were a year ago, but those with a five-year maturing bond will be pleased to see that yields are now significantly higher compared .

“Challenger banks are working hard to bring healthy competition to the market, with the aim of attracting funds for their future lending.

‘However, since the beginning of 2025 there has been a mix of both increases and decreases in the top rate tables.’

What to do if your Money Isa expires soon

For savers whose Isa money matures before April, Sprawling recommends using their £20,000 Isa allowance before the end of the tax year.

If you want to open an account or transfer your savings to take advantage of higher rates, make sure you act early, Sprawling says.

‘To better cope with the large volumes, savings providers can withdraw popular products from the market or make certain products only available to existing customers.

‘So if savers are thinking about opening a new Isa this tax year or transferring an existing Isa balance to a new account, don’t wait too late.’

If you are considering transferring your Isa balance, do not withdraw your balance yourself or you will lose the tax benefits that come with an Isa.

Sprawling also advises savers to consider how their income level affects their tax status and how much of the Personal Savings Allowance (PSA) they are entitled to.

Basic rate taxpayers can earn up to £1,000 in interest income tax-free, while higher rate taxpayers can save £500. Additional rate taxpayers are not entitled to a PSA.

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