MSE’s Money Tips Don't be an April fool: Urgent 5% cash ISAs, beat price hikes (water, broadband, energy, Stamp Duty)

Prepare to pop the champagne corks and light the fireworks, 6 April is New Year (for tax at least) when all ISA and tax allowances reset. Yet that also means you've not long left to use this year's allowance, and it's best to do that, just in case you'll be able to fill next year's too... 

1. CASH ISAs: Have you used your 2024/25 allowance? A cash ISA is just a savings account where the interest is never taxed. Adults can put £20,000 into ISAs each tax year - either split across all the different types, or all in one type, eg, a cash ISA. Yet if you don't use this year's allowance, you lose it, on 5 April. 

When you put money in an ISA, it stays tax-free there year after year. So, if you're lucky enough to have enough, you can fill up this year's now, add another £20,000 on 6 April, and a year later the same again etc - protecting an ever-increasing pile from tax. No wonder some who've maxed it out every year now have £100,000s in 'em.

Understanding how ISAs work is a piece of cake... (I've been doing this analogy since 2001, and it's not stale yet) Picture a cake, let's say a chocolate one for cash savings (though it could equally be a strawberry one for shares). Normally it's just sitting there, so the tax collector can come and take a bite. But think of an ISA wrapper like a protective piece of clingfilm you can wrap around some of the cake. Once your cash is inside, nothing changes - the cash in savings is still cash in savings (so a cash ISA is just a savings account), the only difference is... now the tax collector can't eat any. See our full ISA guide for a detailed Q&A.

The fact that money put in an ISA is never taxed isn't the end of it. The interest earnt in it DOESN'T count towards your Personal Saving Allowance either (the amount of interest earnable each year on any form of savings), so in effect an ISA is an extra allowance. 

Plus, as currently top easy-access cash ISA rates can beat normal savings, even if you don't need tax-protection, they're worth considering. And don't think you're locked into one cash ISA provider; if the rate drops on variable cash ISAs, simply transfer it to a new better payer.

Here are the best buys, though beware the top rates changed more than five times today (Tue), so things are moving rapidly. Click the guide links at the top of the table for the latest rates.

It's worth remembering NOT EVERYONE PAYS TAX ON INTEREST. Exactly how it works depends on what you earn. See my how savings tax works video, but in brief...

• On a very low income? You can usually earn up to £12,570/yr from earnings and interest combined before paying Income Tax. 
• Low earnings & savings interest. The starting rate for savings means some can earn up to £18,570 of earnings and interest combined without paying tax on it (the link explains how it works).
• Basic 20% or higher 40% rate taxpayers. Most people who pay tax on income get a Personal Savings Allowance (PSA). This is the amount you can earn each year from any form of savings, without paying tax on it...
  
  - Basic 20% rate taxpayers can earn £1,000 interest each tax year.
  - Higher 40% rate taxpayers can earn £500 interest each tax year.
  - Top 45% rate taxpayers do not get a PSA.
  
  In practice, you'd currently need over £21,000 at the 4.75% top savings rate to generate £1,000 interest, so only basic rate taxpayers with more are taxed. For higher rate taxpayers you'd need £10,500 at that rate to generate £500 interest.

Cash ISA savings don't count towards the starting savings rate or the personal allowances you get, so if you're going to pay tax, protecting it in an ISA's crucial.

PS: Is the cash ISA limit about to be cut? There have been rumours the Govt may do this - the latest suggest it won't be in the Spring Statement but may be in Autumn's Budget. Until then, carry on regardless - the more you can put in cash ISAs now, the more you have protected.

2. JUNIOR ISAs (JISAs): Up to £9,000 a year saved tax-free for under-18s. JISAs let children save up to £9,000/yr tax-free, so if you need it, use your allowance by 5 April or you lose it - the money is then locked away till they're 18. Yet while children are eligible to pay tax just like adults (see above), most don't earn enough for it to be relevant. 

Where it does differ is on money given to under-18s from parents/step-parents (not grandparents or others). If they earn £100+/yr interest from this, it's taxable as if it was the parents' money (to stop parents stashing cash in their child's name). So, if you pay tax on savings, and give your kids money, JISAs come into their own.

The top payer is Coventry BS's 4.25% AER variable, but it can't be opened online (it's post, branch or phone). NS&I is the top payer that allows online opens, at 4% AER variable. All let you transfer in existing JISAs or Child Trust Funds (JISAs' predecessor), so just apply, then ask for the transfer in the application. More help in Top JISAs.

3. STOCKS & SHARES ISAs: Investing can beat savings. Investing is generally for money put away over the longer term (say, five years plus), in the hopes it'll substantially outperform savings - and while there's no guarantee that'll happen, it really is something many should consider. I rarely talk about it, not because I'm anti-investing, but because it's not my professional expertise, yet I'd definitely suggest you consider it.

You can invest up to £20,000 in a stocks & shares ISA and then you don't pay Dividend or Capital Gains Tax. Or you can split it across different types of ISA, so you could put some into a cash ISA and some into an S&S ISA. One S&S ISA currently gives a FREE '£40'.

4. LIFETIME ISAs (LISAs): Saving for your first home? Get up to £1,000/yr on top. A LISA is a powerful tool for first-time buyers' savings (even if you're buying with someone who's owned before). You can save up to £4,000 each tax year and the state adds 25%, so a max £1,000 free cash every tax year. If you've not filled this year's up yet, and have the cash, do it before 5 April. Do read our full Top Lifetime ISAs guide for a detailed step-by-step. Though I've four basic caveats...

- You have to be aged 18 to 39 to open one.
- You're only eligible for the 25% bonus once it's been open a year. 
- It only works on residential mortgages (not buy-to-let) on a property worth under £450,000. Looking for something costlier? It's not for you. 
- Withdraw for any reason other than to buy a qualifying home (ie, one under £450,000), or once aged 60, and you pay an effective fine of 6.25% of your money to access it.

PS: I recently gave evidence to the House of Commons Treasury Committee about the LISA system holes that need fixing. Yet that doesn't mean you shouldn't do it. It's still good for most. Just ensure you understand whether it's right for you first.

If only April Fool's Day was the month's most frustrating tradition - sadly each year there are a raft of public service & utility price hikes too.

10. Energy Price Cap to RISE by an average 6.4%. 1 April. The Energy Price Cap, which two-thirds of homes in England, Scotland & Wales are on, moves every 3mths - and it will rise 6.4% on 1 April. As the current cheapest fixes are 7% below today's Price Cap, they're 13% cheaper than the average cost of April's Price Cap, so use our cheapest fixes comparison to see what's out there for you.

However, it's worth noting, things are looking a bit better in July and beyond - predictions change weekly but currently they indicate prices then will drop back to roughly what the current Price Cap is. After that, it's harder to tell. So if that makes you nervous, at the very least, there's a no-risk option, the EDF no-exit-fee fix*, at 0.9% below the current Cap (6.9% below April's). So if prices do fall, you can leave penalty-free, whenever.

11. Stamp prices rise up to 21%. 7 April. 1st class stamp prices for standard letters are set to rise to £1.70 (from £1.65), while for large letters they're rising to £3.15 (from £2.60). But buy now and they're valid after, and they're unlikely to drop in price, so stock up on all you'll need in future now - see beat stamp price rises.

12. Stamp Duty in England & N. Ireland to cost more as it's paid on homes over £125,000. 1 April. In the process of buying a home in England or N. Ireland? If you can, complete by the end of the month, else you may have to pay more Stamp Duty - the tax on purchasing a property. Eg, for non-first-time buyers, buying a new home...

• Now: You start paying Stamp Duty of 5% on the amount your property is worth over £250,000 (then 10% on the amount over £925,000, and 12% over £1,500,000).
• 1 April: You start paying Stamp Duty of 2% on the amount your property is worth over £125,000, rising to 5% on the amount over £250,000 (then 10% on the amount over £925,000 and 12% over £1,500,000).

That means someone buying a £350,000 property currently pays £5,000 Stamp Duty... but it'll be £7,500 from 1 April.

There are similar changes for first-time buyers - who'll also see a lower threshold at which they start paying. Full info in our Stamp Duty guide & calc. Rates in Wales and Scotland aren't changing in April.

13. Huge water bill rises in England & Wales, UP a typical 26%. 1 April. Sadly there are huge rises for most people, with some regions worse than others, eg, Southern Water will see average 47% rises (SES Water is down 2%). Yet, even then, individual customers may see bigger rises as the exact cost depends on how price increases are allocated to different charges, eg, metered, non-metered, water and sewerage charges. See how much your water firm is increasing prices by. In Scotland, it's up 10% but it's a different system.

Yet there are ways you may be able to bring this down. For example, in England & Wales...

More bedrooms in your home than people (eg, three bedrooms, two people), or the same number? If so, a water meter is likely to save you cash.

As Emma tweeted last year: "Well looks like @MartinSLewis was right. Got a water meter fitted and my Thames Water bill has gone from £54/mth to £23/mth [a £372/yr saving]." 

If they say you can't have a water meter, ask for an 'assessed charge'. It's often the best of both worlds. Plus, there's lots more help, including info on discounted tariffs, for those on low incomes or on benefits, or with medical conditions, in our water savings guide, and some of these work for Scotland too.

14. Council Tax bills up typically 5% to 10% (often £100+/yr). Can you slash yours? Most English councils have signalled they'll raise bills by the max 5% this year, adding a typical £110/yr for a band D property (a few have been given permission to raise it more). In Wales it can be 7%, in Scotland 10% rises will affect many. For more, see what's happening to Council Tax bills in April.

Little can be done about rises, but there are two important checks you should make to see whether you can cut costs... 

a) Are you one of up to 400,000 in the wrong band? If yours is too high, you could be due a backdated payout of £1,000s plus a lower bill. Try my 10-min Council Tax check 'n' challenge to see whether you can potentially get your band lowered. The guide goes through step-by-step. Do follow it - get it wrong and you risk you or your neighbours potentially paying more.

b) Live alone (or with children), student, on low income, have a disability or a 'Severe Mental Impairment' - eg, serious dementia or stroke? Are you missing out on a discount? Full info in Are you due a Council Tax discount?

15. Many broadband and mobile bills rise 6% to 7.5% on 1 April. Many will see above-inflation rises even if mid-contract (this has been banned for new customers, but not existing ones). These are so big we've given them their own space below...

- See our full Slash broadband costs to £19/mth.
- And Cut mobile bills down to £3/mth.