Spring is the season to get your savings into shape

Spring is a pivotal season for our personal finances.

If your New Year’s resolution was to start saving, or knock your existing savings into shape, now’s not the moment to give up. Even if other goals, like going for a daily run, have been set back by this winter’s soggy conditions.

Saving makes good financial sense.

What’s more, getting into the savings habit means you’ve got something to build on, even if you don’t have much disposable income to begin with. Automating your payments, via direct debit for example, can make the habit easier to maintain over the long-term.

Reviewing your savings, meanwhile, can also result in a financial boost and make you wealthier over the longer term.

Countdown’s started

That’s important, because last year’s Budget included some important announcements which mean the clock is ticking for savers this Spring.

These changes are covered below, along with a reminder of how savers can use existing rules to maximise the returns on their cash.

The main challenge for savers is to ensure that the returns earnt by their money stay ahead of inflation. Otherwise, the ‘real’ value of their cash will erode over time.

It’s worth remembering that the interest paid on savings can be variable and depend on prevailing economic conditions, as well as the latest ‘bank rate’ announcement from the Bank of England.

Interest rates have edged lower over the past year to a current figure of 3.75% (February 2026). This downward move means your savings might be earning less interest than you thought, especially if you’ve not checked for a while.

Clear idea

Our financial needs have a habit of changing over time. So, it’s worth reviewing your savings to get a clear picture of your situation. This allows you to work out a savings plan that fits in with your wider financial requirements.

Note down your savings accounts, the amounts contained in each, and the interest they receive. If you’ve got several savings pots, it’s possible they could benefit from being consolidated into one account paying a higher return.

Having created your overview, conventional financial planning wisdom says that savings should then be prioritised.

Begin by earmarking cash you might need in an emergency.

Ideally, this pot should be between three to six times your monthly income and held in either an instant, or easy-access, account. This means there would be no delay in withdrawing your money, should the need arise.

Shop around

Instant access accounts don’t typically offer the best returns, but it’s still worth shopping around using independent aggregator websites to discover the best rates. For ease of comparison, these are usually expressed as the Annual Equivalent Rate, or AER.

Before choosing an account, watch out for any restrictions it imposes, a minimum withdrawal amount, for example.

Having tackled your short-term cash needs, you can then think about moving remaining savings into accounts that pay higher rates of interest.

These could include fixed-rate savings accounts, where the return on offer is locked in for a particular time period. Anything between one and five years, say.

Know your limits

With fixed accounts, savers know in advance the amount of interest their cash will earn. But in exchange for higher interest rates, accounts can restrict savers as to how and when they can access their cash.

A customer might need to give notice before making a withdrawal, for example. Or withdrawals could be limited to a certain number per year.

If you’re expecting to save little and often, a regular saver account could make sense. These accounts allow savers to deposit a limited amount of cash each month, for a fixed time-period. Some regular saver accounts are easy access, while others prevent withdrawals from being made until the end of the term.

Bear in mind that interest on conventional savings accounts is taxed. The good news is that we each have an annual Personal Savings Allowance (PSA) which means savers can receive a certain amount of interest, each tax year, before being required to pay tax on their savings.

For basic rate (20%) taxpayers, the tax-free allowance is currently £1,000 each tax year. For higher rate (40%) taxpayers the threshold falls to £500 each tax year, and there is no allowance at all for additional rate (45%) taxpayers.

Take advantage

Paying tax on savings puts a hole in your finances. That’s why it’s also important for savers to take advantage of the tax-efficient options provided by the government to help them shelter as much of their money as possible from tax.

Take the Individual Savings Account, or ISA, for example.

ISAs are not financial products in themselves. Essentially, they are tax-efficient wrappers in which individuals can hold a wide range of assets, including their cash savings.

The crucial point about savings and investments held within ISAs is that they grow free of both income and capital gains tax.

All UK adults aged 18 or over currently receive a £20,000 ISA allowance each tax year.

Individuals are free to choose what they hold in an ISA. But note that the allowance is an annual ‘use it or lose it’ amount which cannot be rolled over from one tax year to the next.

Popular choice

Cash ISAs come in a number of guises, such as easy access and fixed-rate, and have proved enormously popular with savers. The interest earned in a Cash ISA does not count to your PSA.

Latest figures from HM Revenue & Customs show that there are more than 4.4 million account holders with a Cash ISA balance worth £10,000 or more.

Money saved in ISAs with an authorised UK bank or building society is also protected by the Financial Services Compensation Scheme up to £120,000 per institution.

With the deadline for this year’s ISA allowance ticking down to 5 April 2026, there is not much time left for eligible savers to set up a Cash ISA, or top-up an existing arrangement.

Change on the way

The next ISA allowance, covering the 2026/27 tax year, will then come into play from 6 April 2026. From April 2027, however, the rules around ISA allowances change significantly for savers.

That’s because, following an announcement in last year’s Budget, the amount that savers under 65 will be allowed to put into a Cash ISA will fall to £12,000 from the 2027/28 tax year onwards. Those aged 65 or over, however, will be able to continue contributing up to £20,000 if their circumstances allow.

The changes may sound a long way off. But if you’re under 65 with sizeable savings that you want to move into Cash ISAs, remember that the most you will be able to squirrel away in the current tax year and the next one combined is a maximum of £32,000.

This is a sizeable drop of £8,000 compared with the current rules. It’s sensible to start planning now to make full use of the present ISA allowance while it still exists.

Tax treatment depends on individual circumstances and may change in the future. Investments can go down as well as up, and you may get back less than you invest. Moneybox or its associated third parties do not offer personal financial advice or make specific recommendations based on your individual circumstances. If needed, seek independent financial advice before making decisions regarding your financial goals.