The best Isas you can still open NOW to protect savings and investments from the budget tax raid

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Britons are bracing for a budget in which the Chancellor is expected to announce sweeping tax increases.

While nothing is confirmed yet, this could include changing the Isa subsidy so that fewer people’s savings (or returns in the case of stocks and shares Isas) are sheltered from tax.

Rachel Reeves may also decide to impose a higher capital gains tax on investors when they sell shares.

As a result, people have been stockpiling money in ISAS tax-free in the days and weeks leading up to the Budget, and there is still time to do so.

Making hasty decisions based on speculation is not recommended, and financial experts urge people not to panic.

It is also possible that any changes to the Isa rules will not be implemented immediately, but rather come at the start of the new tax year in April 2025.

But for those who decide that protecting their money or investments in an Isa is right for them, we explain the possible changes and highlight some of the accounts on offer that can still be opened ahead of the Budget.

Why are savers investing more money in Isas?

Isas are the basis on which diligent savers and investors can build up savings of up to £20,000 each year, without having to worry about paying tax.

But it has been reported that the annual Isa allowance could be reduced from £20,000 to £15,000 in the Budget, meaning less of your money would fall into the tax-free envelope each year.

As a result, savers have been stockpiling money into Isas now, to take advantage of the higher limit in case it is cut later.

Stockbroker Hargreaves Lansdown has reported a record number of top-ups for Isas. The number of people maximizing their Isas with the company, which offers cash Isas as well as stocks and shares, has so far this financial year increased by 40 per cent.

New figures from the Bank of England also reveal that savers invested £3.9bn into Isas in September.

But there is also a warning for those who already have a large amount of money in an Isa.

It has been suggested that Labor could introduce a £500,000 Isa lifetime allowance in the Budget. Most savers won’t come close to that amount, but if you think you could put more in the tax-free wrapper now, it could backfire.

If you want to open an Isa to keep as much of your money tax-free, there’s still time before the budget – here are five of the best cash Isas you can still open.

Easy access isas

Trade 212

Exchanging Isa* of 212 offers the best overall rate for easy-to-access cash. Isa pays 5.1 per cent.

There are no limits to the number of times you can withdraw your money and Trading 212 will not reduce your interest rate to access your money.

Trading with the 212 Isa is a flexible Isa that is a great benefit for savers with the financial power to maximize their Isa limit each year.

Flexible Isas allow you to dip into your fund and, as long as you pay the money back during the same tax year, you don’t lose your tax-free wrapper or use up that year’s Isa allowance.

The account can only be opened by downloading the Trading 212 app and you can start saving from as little as £1.

Chip

Flexible Chip ISA*Paying 4.84 per cent offers the best rate for customers who want to get in and out of their boat without spending their Isa allowance in the process.

There are no limits to how many times you can withdraw your money and Chip will not lower your interest rate to access your money.

It’s worth noting that when the base rate goes up or down, your savings rate will move the same day with this account.

It is 0.26 percent below the current base rate, which stands at 5 percent. Previously this account paid 5.1 percent, when the base rate was 5.25 percent.

When the base rate goes up or down, your savings rate will increase the same day.

A Chip spokesperson said: You can open a Chip Cash Isa in a few minutes; All you need is our app and your National Insurance number, to be able to make it up to budget.

“I would say with some degree of certainty that any change to the Isa rules would come with a healthy delay to allow financial institutions to adapt their processes.”

Parangon Bank

Paragon’s Easy Access Isa, which pays 4.87 per cent, is also a flexible Isa, meaning savers won’t lose their Isa allowance if they want to withdraw money from their fund.

Called “double access”, Paragon’s Isa only allows you to withdraw money twice before being penalized. On a third withdrawal, the rate drops to just 1.5 percent.

The lowest interest rate will apply from the third withdrawal until the day before the anniversary of your account opening. Starting on your anniversary, the interest rate and withdrawals restart.

This Isa can be opened online with a deposit from £1,000. For those who don’t want to download an app to get an Isa, which many of the major easy-access Isas require, such as Plum, Zopa and Chip, this is the best option.

Shield: Although the limit could change, Isas still provide valuable tax protection

fixed rate isas

For savers who want the certainty of receiving a guaranteed interest rate before interest rates are cut again, a fixed rate Isa could be the answer.

Kent Trust

Kent Reliance has a one-year Isa that pays 4.51 per cent over a one-year term.

A saver investing £10,000 in this Isa would earn around £460 in interest at the end of the one-year term.

The Isa can be opened online on the Kent Reliance website with a minimum of £500. It can also be opened at a Kent Reliance branch.

Bath Building Society

Bath Building Society’s Isa pays a market-leading 4.4 per cent over two years. A saver investing £10,000 in this Isa would earn around £918 in interest at the end of the two-year term.

This account can be opened online on the Bath Building Society website for as little as £1. It can also be opened at a Bath Building Society branch.

One drawback of this Isa is that it does not accept transfers from other Isas.

What about stocks and shares Isas?

Reeves is widely expected to carry out a capital gains tax raid to boost the Treasury coffers, so if you have money in investments as well as cash savings, you could be in the firing line.

Darius McDermott, managing director of Chelsea Financial Services, said: “With talk of increasing the capital gains tax on shares from 20 per cent to 24 per cent for higher and additional rate taxpayers, it is now the Time to make the most of tax-efficient vehicles.

‘Use your £20,000 annual Isa allowance to keep your portfolio growth intact and protected from the reach of potential future taxes.

“If you normally move money from a general investment account into an Isa at the end of each tax year, you may want to do this before CGT increases.”

Rumors of a capital gains tax raid have also led some investors to sell their shares ahead of the budget and then buy them back under the stocks and shares Isa.

This deal is known as a ‘Bed and Isa’, but experts have warned it could still lead to a capital gains tax bill if the profit from the sale exceeds £3,000.

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