The average one-year fixed ISA rate has risen to 4.24%, according to the latest Moneyfacts UK Savings Trends Treasury Report, delivering a potential £138 boost for higher-rate taxpayers compared with non-ISA accounts. The report shows that the fixed rate savings market is now offering what experts describe as "genuine choice and genuinely competitive returns".
Overall product choice has risen to 2,617 savings deals, including ISAs, beating previous all-time highs. Excluding ISAs, product count rose to 1,871, the highest number of non-ISA products on record. The number of cash ISAs rose to 746. The number of accounts paying above Base Rate at £5,000 rose to 1,412, its highest since July 2012.
Rate rises across the board
The average easy access rate remained unchanged at 2.53%, while the average easy access ISA rate stayed at 2.72%. The average one-year fixed rate rose to 4.23%, its highest since November 2024. The longer-term average fixed rate jumped to 4.25%, its highest figure in over two years. The longer-term fixed ISA rate rose to 4.27%, its highest since January 2024.
For a saver with £20,000, the average one-year ISA rate would give around £848 in interest over a year, compared with £846 in a non-ISA account. While the £2 difference may seem small, for a higher-rate taxpayer with a £500 Personal Savings Allowance, the ISA could leave them around £138 better off, with the full £848 interest kept compared with around £708 from the non-ISA after tax.
Experts weigh in on the ISA advantage
Caitlyn Eastell, Personal Finance Analyst at Moneyfacts, said: "The fixed rate savings market is shifting in favour of ISA savers, with average one-year and long-term ISA rates now moving ahead of their non-ISA counterparts. Historically, savers have often faced a trade-off between securing competitive rates outside an ISA or keeping their interest tax-free."
She added: "However, this shift could mean that this compromise may no longer be necessary. The wider savings market is also offering more opportunities for competitive returns, with 1,412 accounts paying above base rate, the highest number seen since July 2012. While growing choice is great for returns, savers, particularly higher-rate taxpayers, must carefully consider where they keep their pots. Moving to a competitive ISA could mean more of their returns stay in their pocket."
David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, said: "The savings market is quietly delivering something it has not managed for years: genuine choice and genuinely competitive returns. Over 2,600 deals, fixed rates at their highest since late 2024, and more providers entering the market. For savers who have spent the better part of a decade being told that 0.1% was somehow a decent savings rate, this is a different world. However, the ISA question matters more than the headline numbers suggest."
Tax implications and the need to shop around
Stirling continued: "The difference between an ISA and a non-ISA fixed rate looks negligible until you apply 40% tax to it. A higher-rate taxpayer keeping the full £848 interest rather than £708 after tax is not a rounding error. It is HMRC quietly helping themselves to your savings return before you have even noticed."
He added: "Savers should shop around as the gap between the average rate and the best rate remains significant. Loyalty to your existing bank and their products remains one of the most expensive habits in British financial life."
