ISA savers in last minute rush

The traditional end-of-year hurry appears to be in full swing as savers only have until the end of the tax year to invest in their ISAs.

Surprisingly, the financial downturn has not deterred the regular rush of people wanting to fill their allowance before the Sunday April 5 deadline.

However, the deadline for people depositing their money or even opening an ISA over the internet is likely to be at the close of business on Friday. This includes Alliance & Leicester, Abbey and Bradford & Bingley.

But some ISA applications for this tax year may be accepted up to the close of business on Saturday by major banks and building societies.

Online or telephone ISA applications for 2008/09 until 11pm on Sunday can be made by existing customers of a number of institutions, including Barclays, and existing NatWest and Royal Bank of Scotland ISA customers can top up their accounts online right up until the midnight deadline.

An equity ISA allows people to save up to £7,200 each tax year - or up to £3,600 into a cash one, and the balance of the £7,200 into an equity one.

It had been feared that low interest rates may put people off using their ISA allowance due to the belief that returns on savings accounts are currently so low, the tax-free benefit is not worth much.

However, a higher rate taxpayer needs to earn 1.67% on a normal savings account just to equal every 1% they earn through an ISA, while a basic rate taxpayer would have to earn 1.25%.

ISAs also currently offer some of the best savings rates available, with Barclays paying a return of 3.61% through its Golden ISA, while NatWest is offering 3.51% through its Cash ISA Plus and National Counties Building Society is offering 3.26%, all of which can be opened with just £1.

Principality Building Society is also launching a new regular saver ISA from the start of the new tax year, offering a fixed rate of 5%, although some terms and conditions apply.