It's a new tax year – so think about using your new ISA allowance

Update: 6 May 2015: The general information below is still correct, although many of the best buys detailed have since changed. As of 6 April 2015, the ISA allowance has also increased to £15,240/year. See our Best Cash ISAS guide for the most up-to-date deals.

The new tax year has just begun, meaning every UK over-16 now has a brand new ISA allowance. Everyone with savings, even if it's just £100, should consider using it.

An ISA is just a savings account you don't pay tax on. Better still, once the money's in it, it stays tax-free year after year (see our Best Cash ISAs guide for the top deals). If you earn £100 interest in a savings account, for example, after basic tax, you'd only receive £80, or £60 after higher rate. In a cash ISA, you keep the whole £100.

The new tax year started on Sunday, which means every UK over-16 gets a brand new, bigger cash ISA allowance of £5,940 (up to £11,880 of stocks and shares).

The big difference this year is that from 1 July, ISAs turn into new ISAs (NISAs), with a £15,000 allowance. And for the first time, you'll be able to use all of it for cash.

There's no need to wait, though – you can open a new 2014/15 ISA now, then top it up to £15,000 from July.

Even if you think there's a chance interest rates will improve by July, open a top easy access cash ISA now. Then you can transfer it to a better rate later – as long as the provider accepts transfers. Here are the current best buys.

Top easy-access cash ISAs

If you know you need to take your cash out soon, then you need easy-access. Here are the current top rates: 

• Santander's 1.6% AER variable Direct ISA (minimum £500) lets you put new money in and transfer old ISAs to up the rate.

• Metro Bank's 1.65% AER Instant Access Cash ISA (minimum £1, allows transfers in) is the top easy-access payer, but you can only get it in its branches, which are all in and around London and south-east England.

• Cheshire, Derbyshire and Dunfermline's Easy Saver pays 1.6% AER (minimum £1, no transfers in allowed). However, the account must be opened in branch.

• Halifax (minimum £1, allows transfers in) is 1.55% AER variable. Of this, 1.3% is a bonus lasting a year, so you'll need to ditch and transfer then. The big plus is that meanwhile, it's effectively a strong rate guarantee. 

Best fixed cash ISAs

Unless you know you'll need the cash soon, there are far better deals than easy-access ISAs. Plus, if you manipulate fixed deals, they'll let you access the cash when you want. Like all fixed rates, the Coventry BS's four-year fix at 2.75% (minimum £5,940, no transfers in allowed) is designed for locking cash away. But it allows you to close the account and withdraw early for a relatively low penalty, just 120 days' interest. A number crunch shows if you withdraw after a year, you'd effectively have got 1.85%, beating the best easy-access deals. After two years it's 2.3%, beating the best two-year fix (except for Santander 123 customers). After three years it pays 2.45%, which beats the best three-year fixes too. 

If you just want to go with a straight fix, Halifax is 2% AER for 18 months and 2.05% AER for two years. Santander 123 customers can, however, earn more in a two-year fix at 2.3% AER (everyone else will earn 2% AER).

Regular saver cash ISAs

Nationwide's new regular saver pays a variable 2.5% AER and allows you to make unlimited withdrawals, although you can't transfer in old ISAs. You need to deposit a minimum of £1, after which you can deposit up to £1,250/month until March 2015.  

From 1 March 2015, the maximum monthly deposit limit will be removed, allowing you to top up to the maximum of £15,000.

Are ISAs worth it if bank accounts pay 5% interest? 

While cash ISAs easily beat top normal savings, some bank accounts offer up to 5% savings as loss-leaders (see our Best Bank Accounts guide). So even after tax, they can beat the top cash ISAs. 

However, you need to factor in the long-term ISA gain. By putting money in an ISA now it means it's not just tax-free this year, it remains tax-free year after year.To get the best of both worlds, one technique would be to put your money into a bank account and earn interest there until next April, then move it into an ISA just before the end of the tax year to maximise your allowance.

See Martin's Get 5% interest on your ISA money blog post for a full analysis.