Bank increases interest rates on Cash ISAs up to 'competitive' 4.33%

A UK based bank is offering increased rates across multiple Cash ISAs before the end of the financial year. Paragon Bank has increased rates across its one, two, three and fiveyear fixedrate Cash ISAs as well as boosting the rate on its popular 15month fixedrate ISA to 4.33% AER.

With the current tax year due to end on April 5, savers have just days to utilise their £20,000 tax free ISA allowance.

Paragon's range of fixed-rate cash ISAs will be available from 24 March via Paragon's online channels and by post. Andrew Wright, Head of Savings at Paragon Bank, said: "With the tax year end fast approaching, many savers are looking for ways to make the most of their ISA allowance.

"By increasing rates across our fixedrate ISA range, including our popular 15month ISA to a leading 4.33%, we're giving savers greater choice and the opportunity to lock in competitive, taxfree returns across a range of maturity dates.

"Whether customers are looking for shortterm certainty or are happy to commit their savings for longer, our latest ISA range is designed to help them get more from their money."

The new rates come as financial experts warn savers that they may need to spend or invest it to avoid huge tax bills.

Cash ISA limits reset each tax year, with the new limit in play again from April 6, 2026. This year, the amount is still being held at £20,000, meaning savers can deposit that amount tax-free in an ISA before April 5, 2027.

From April 6, 2027, Chancellor Rachel Reeves' plan to slash Cash ISA limits will come into effect, reducing the amount that savers under 65 can put into a Cash ISA from £20,000 down to just £12,000.

The other £8,000 must be put into a Stocks and Shares ISA instead under the new rules, or simply held in taxable savings accounts for those not willing to invest.

According to Laura Suter, director of personal finance at AJ Bell, the decision to hack away at the Cash ISA limits for those under 65 will leave savers 'looking down the barrel' of a bigger tax bill next year unless they take action following the change.

She said: "While the ISA allowance will be slashed for cash, it will remain at the full £20,000 for investments. We know that we're a nation of cash lovers, and many people have more cash than they need.

"FCA data shows that since 2021 the number of people holding more than £10,000 in investible assets wholly or mainly in cash has risen from 8.4 million to 11.8 million."