The Daily Observer London Desk: Reporter- Victoria Smith
Coventry Building Society has launched a best buy ‘easy-access’ cash Isa for new and existing customers paying a rate of 4.9 per cent.
Savers can open the tax-free account from £1 and deposit up to £20,000 for the current tax-year.
The account allows four withdrawals every 12 months starting from the day the account is opened. Any withdrawals after this face a charge equal to 50 days’ interest.
Savers can choose from annual or monthly interest, which can be added to the account or paid into a nominated account.
Table-topping deal: Coventry Building Society’s easy-access cash Isa beats the rest paying 4.9%
The account can only be opened and operated online and it accepts transfers in from other Isas.
There has been a flurry of activity at the top of the easy-access cash Isa tables in the past few days.
Leeds Building Society upped the rate on its easy-access cash Isa to 4.8 per cent on Thursday ahead of the Bank of England’s decision to pause the base rate.
Now, all eyes will be on easy-access cash Isa rates to see if they creep up to 5 per cent and catch up with non tax-free easy-access accounts – currently savers can get a top 5.1 per cent on an easy-access without the tax-free wrapper with Leeds.
Cash Isas saw record-breaking inflows of more than £3million in July, the Bank of England’s Money and Credit report revealed last month.
The sharp rise in savings rates has meant many savers could face the prospect of exceeding their annual Personal savings Allowance and being taxed on their interest income.
Therefore, more savers have been sheltering money in tax free Isas again to keep tax liabilities to a minimum.
The PSA allows basic rate taxpayers to take home up to £1,000 worth of savings interest tax-free each year (£500 for higher rate taxpayers).
Read more here: Will you be hit by a tax bill on your savings as rates rise?
Bethaney Cozens, of Coventry Building Society, said ‘The tax bills many savers are now facing has encouraged the take up of Isas.
‘We’ve opened almost as many new Isas so far this year than the last two years combined, as Isas have become an increasingly popular option for members wanting to maximise their tax-free savings allowances in a higher interest rate environment.’
