Paragon Bank has increased the rates on its fixed rate ISA products as the deadline to max out your ISA allowance looms.

Savers can put away up to £500,000 into the accounts, with the new rates coming into effect from Friday, March 15.

The rate increases include:

• One-year fixed rate cash ISA – up from 4.65 percent to 5.05 percent
• Two-year fixed rate cash ISA – up from 4.20 percent to 4.59 percent
• Five-year fixed rate cash ISA – up from 3.75 percent to 4.00 percent.

Derek Sprawling, Paragon Bank savings director, said: “Last year was one of the busiest ISA seasons on record, with much of that money directed towards one-year variants.

“As those rates mature, we want to offer savers competitive options for their ISA cash. A large cohort of ISA savers also typically leave it late in the tax year to utilise their £20,000 allowance, so we expect a busy few weeks before the tax year ends.”

A person can deposit up to the £20,000 total allowance each tax year. The rules are changing next year so you can deposit funds in more than one of each type of ISA.

Changes to ISA policy were set out in the Spring Budget, with a new British ISA to be created, with an additional £5,000 allowance for the savings vehicles.

Funds put in this account will go towards UK businesses to help grow the economy.

Martin Lewis said of the new ISA on his BBC podcast: “There are quite a lot of people who have that type of money saved in ISAs.

“They’ll be able to put a little bit more away tax free as long as they’re investing in British assets, and that is to try and give a little fill up to investments in Britain.”

ISA savings are exempt from tax, with no tax to pay on any interest or growth in investments within an ISA, or on any income derived from an ISA.

Laith Khalaf, head of investment analysis at AJ Bell, pointed out that ISA savers can already put their funds into UK businesses.

He said: “Many already do, and though UK funds have fallen out of favour in recent years, investment in individual UK stocks by DIY investors is still very common.

“In theory investors can invest all of their £20,000 ISA allowance into the UK stock market, but that’s putting a lot of eggs in one basket.”

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