Yahoo Finance Average cash Isa rate passes 2pc for first time since 2009
Cash Isas rates have climbed above 2pc for the first time in 14 years.
The average savings rate on a cash Isa has increased from 0.3pc to 2.01pc in the last 12 months, according to Moneyfacts, an analyst.
Returns on these tax-free saving accounts are now at their highest point since February 2009.
Cash Isas are gaining increasing popularity with savers who face paying tax on their returns for the first time in years.
Higher-rate taxpayers can earn £500 in savings interest each year outside of an Isa before having to pay tax.
This savings allowance is £1,000 for basic-rate taxpayers. Additional-rate taxpayers do not receive an allowance.
A higher-rate taxpayer with more than £27,027 in the average easy-access savings account, which now pays 1.85pc, would have to pay tax in their returns.
Non-Isa easy-access rates are now at their highest level since December 2008, up from 0.25pc a year ago.
Rachel Springall, of Moneyfacts, said: “As a new tax year looms it is encouraging to see interest rates have improved across cash Isas for those savers who still need to utilise their Isa allowance.
“The savings market overall is going through a buoyant period thanks to a mix of rate competition, Bank Rate rises and the rush of launching enticing offers for savers looking for a deal before the 2023-24 tax year begins.”
Savers have until April 5 to make use of their annual £20,000 Isa allowance before the new tax year begins.
Those willing to lock their money away for a fixed period of time can earn even higher returns.
The average one-year fixed Isa has risen from 0.72pc to 3.56pc in the past year and is now at its highest point since December 2008.
