UK Savers Risk ISA Tax Losses Before April 5 Deadline

Millions of British savers stand to lose thousands of pounds in tax-free interest as the current tax year draws to a close on April 5, with many failing to maximize their £20,000 Individual Savings Account allowance or switch to higher-yielding Cash ISAs amid a wide gap in available rates.

Financial experts warn that outdated accounts are eroding returns for savers holding an average of £26,900 in Cash ISAs, according to HM Revenue and Customs figures. While top accounts currently offer rates around 4.5 to 4.68 percent, some legacy options pay as little as 0.75 percent, and the average stands at 2.9 percent. This disparity, compounded over time, could cost individuals up to £14,000 in foregone interest over a decade for a typical balance. For instance, a £20,000 deposit at the highest rate would grow to approximately £31,598 in 10 years, compared to £21,551 at the lowest rate, a difference of nearly £10,000. At the average rate, it would reach about £26,652, still £4,500 short of the best performers.

The issue stems from what experts call the "ISA loyalty penalty," where savers remain with longstanding providers out of habit or convenience, unaware that banks often reserve...