Isa market hit by 'worst' savings deals, says Moneyfacts

Low interest rates and changes to savings taxation are resulting in "perhaps the worst Isa season on record", a financial analyst said.

The returns available to savers putting money into a cash Individual Savings Account (Isa) are among the lowest ever seen, Moneyfacts said.

This time of year tends to see banks offering better rates to attract savers to the tax-free products.

Moneyfacts said the best easy-access Isa rate was 1.41%.

This was well down on the top rate of 3.15% offered five years ago.

The returns for Isa savers have been hit by the low interest rate environment, as well as the introduction of a new personal savings allowance in April, which will mean most savers will be free from tax on their savings interest anyway.

The change means basic rate taxpayers will be able to earn up to £1,000 in savings interest tax-free and higher rate taxpayers will be able to earn up to £500 in tax-free savings income.

Charlotte Nelson, of Moneyfacts, said: "Isas were once the go-to product for savers as they offered not only tax benefits but also some of the better rates on the market.

"However, this is certainly no longer the case thanks to almost constant rate decreases. For instance, the best easy access Isa rate has dropped by 0.10% in just six months, making this perhaps the worst Isa season on record."