Savings alert: Bank offers £275 free cash plus 4.40 per cent interest rate as new tax year begins

Temie Laleye
Tue, 07 Apr 2026 19:46:19 +0000

Banks are stepping up competition for savers at the start of the new tax year, offering higher rates and cash bonuses to win new customers.

Some banks are even handing out free cash, giving savers an added incentive to switch or open a new account.

First Direct has unveiled a £100 cash reward for customers who deposit or transfer at least £10,000 into its variable cash ISA by May 4.

Those who also switch their current account through the official switching service could pocket an additional £175, bringing the total potential bonus to £275.

To qualify for the ISA incentive, savers must hold a First Direct current account where the reward will be deposited.

The funds must be genuinely new money, not previously held with First Direct, HSBC or M&S Bank before 6 April 2026.

Successful applicants will receive their payment on July 31.

Barclays has also moved to boost its savings offerings, announcing rate rises of up to 0.40 percentage points on Tuesday.

Its one-year flexible cash ISA now pays 4.20 per cent, having previously offered four per cent, while the Premier 18-month flexible cash ISA has climbed from 4.10 per cent to 4.40 per cent.

The bank's one-year fixed bond has seen a notable jump from 3.30 per cent to 3.70 per cent.

Customers transferring existing ISA balances could also receive between £50 and £600, provided they complete the necessary steps by 30 April.

Sian McIntyre, head of savings at Barclays UK, said: "Given recent market volatility and concerns over rising costs, more people than ever may decide the best place for their savings is a predictable and tax-efficient fixed cash Isa."

This tax year represents the final opportunity for savers under 65 to place their entire £20,000 annual ISA allowance into cash products.

From 6 April 2027, new regulations will restrict adults below retirement age to depositing a maximum of £12,000 in cash ISAs, with the remaining £8,000 of their allowance directed towards stocks and shares investments.

Those aged 65 and above will continue to enjoy the full £20,000 cash ISA subscription limit.

Ms McIntyre added: "With no clear consensus on what will happen with the Bank of England base rate this year, people preferring a cash Isa can take advantage of the fact you can split your allowance across multiple products."

The Middle East conflict has altered market expectations, with interest rates potentially staying elevated for longer than previously anticipated.

Research from Flagstone indicates that cash ISAs remain highly popular, with 67 per cent of savers identifying them as their preferred savings vehicle.

Katie Horne, banks relationship manager at Flagstone, said: "It's a great time for savers to take advantage of competitive rates and compelling incentives."

Separate findings from a Triodos Bank UK survey suggest that 44 per cent of people would prefer their savings to fund projects that benefit local communities.

The poll of 2,000 UK adults, conducted by Opinium between February and March, also found that 34 per cent would welcome opportunities to pool resources with neighbours for direct investment in local initiatives.

Roger Hattam, director of retail banking at Triodos Bank UK, noted that people "care deeply" about their local communities.