Isa providers increasing rates and offering cash as new tax year gets under way

Isa providers are making new cash offers or increasing their rates to tempt savers, as the new tax year gets under way.

First Direct has launched a new £100 cash incentive for Isa customers on top of its current account switching bonus, potentially giving new customers the opportunity to claim a combined total of £275.

New and existing customers are being offered £100 if they deposit or transfer in £10,000 or more into a First Direct variable cash Isa before May 4.

To be eligible for the offer, customers need to hold a First Direct current account for the reward to be paid into.

Eligible customers switching their current account through the Current Account Switch Service (Cass) and meet the switching criteria can also claim a £175 switching incentive on top of the £100.

Customers are eligible for the £100 cash reward if they meet certain criteria, such as transferring in an Isa into a First Direct cash Isa from a non-HSBC group Isa and contributing at least the qualifying amount; or already holding a First Direct Isa and depositing at least the qualifying amount of £10,000 or more in new funds.

New funds are those not already held in any account with First Direct, HSBC or M&S Bank, before April 6 2026.

Eligible customers will receive the reward on July 31.

Barclays also announced on Tuesday that it has increased rates on some savings products by as much as 0.40 percentage points.

The increases include a rate of 4.20% on its one-year flexible cash Isa, up from 4.00% previously.

Barclays’ Premier 18 month flexible cash Isa has a new rate of 4.40%, up from 4.10%.

It is also offering a rate of 3.70% on its one-year fixed bond, up from 3.30%.

Barclays is also offering £50 to £600 for transferring Isa balances, subject to terms and conditions and certain steps being taken by April 30.

Sian McIntyre, head of savings at Barclays UK, said: “We know now is one of the most popular times to open a cash Isa account, as people open new products after their allowance has reset.

“Given recent market volatility and concerns over rising costs, more people than ever may decide the best place for their savings is a predictable and tax-efficient fixed cash Isa.

“It’s important to consider what product works best for you and research what’s on offer. For example, you might want to maximise your interest rate, or the flexibility to make penalty-free withdrawals may be more of a priority.”

While cash savings accounts give savers certainty over the returns they receive, over the longer term, funds held stocks and shares may potentially outperform those held in cash.

However, the value of investments can go down as well as up and investors may get back less than they paid in.

The conflict in the Middle East has changed expectations for financial markets, with interest rates predicted to potentially remain higher for longer.

The new tax year, which started on April 6, is also a “last chance” for adult savers aged under 65 to stash their full £20,000 annual Isa allowance in cash.

From April 6 2027, changes will mean that, while the total annual Isa allowance will still be £20,000, adults aged under 65 will only be able to put away up to £12,000 in a cash Isa, with the remaining £8,000 allowance potentially going into stocks and shares.

Savers aged 65 and over will retain the annual £20,000 subscription limit for a cash Isa.

Ms McIntyre added: “With no clear consensus on what will happen with the Bank of England base rate this year, people preferring a cash Isa can take advantage of the fact you can split your allowance across multiple products.”

Meanwhile, a recent survey for Triodos Bank UK indicated that 44% of people would like their savings to support projects benefiting communities across the UK.

Around a third (34%) of people said they would welcome the opportunity for their local community to pool money and help invest directly in local projects, according to the survey of 2,000 people across the UK in February and March, carried out by Opinium.

Roger Hattam, director of retail banking at Triodos Bank UK, said that people “care deeply” about local communities.