Shawbrook Bank has increased the interest rate on its one-year fixed ISA, earning an “excellent” rating from Moneyfactscompare.co.uk.

Now paying an Annual Equivalent Rate (AER) of 5.83 percent, Britons looking for a tax-efficient savings option can open the competitive ISA with a minimum deposit of £1,000.

Commenting on the deal, Rachel Springall, finance expert at Moneyfacts, said: “This week, Shawbrook Bank has increased the rate on its one-year fixed ISA, improving its position in the market.

“Savers searching for a guaranteed return on their cash and wishing to utilise their ISA allowance may find this a competitive choice as the deal holds a more prominent position in its sector.”

Ms Springall added: “Consumers can make Cash and Stocks and Shares ISA transfers into the account, and if they so wish, access their deposit subject to a loss of interest penalty. Overall, the deal earns an Excellent Moneyfacts product rating.”

Interest can be paid monthly or annually and up to £250,000 can be held in the account overall.

This ISA can be opened online by UK residents aged 18 or over and only one account is allowed per customer.

Withdrawals are permitted, however, these will be subject to a charge equivalent to 90 days' interest if made during the specified fixed term.

But while Shawbrook may be holding a more "prominent" position on the leaderboard, it isn’t currently topping the table. Placing just ahead is Virgin Money’s One Year Fixed Rate Cash ISA Exclusive (Issue Six) paying an AER of 5.85 percent.

There is no minimum deposit required and the account can be opened online by UK residents aged 16 or over. Interest can be paid either monthly or annually.

Savers with Virgin Money also get access to special deals across the wider Virgin Group that can help people save on everyday essentials, as well as days out and holidays.

Withdrawals are permitted, however, these will be subject to a charge equivalent to 60 days' loss of interest on the amount withdrawn.

Adam Thrower, head of savings at Shawbrook, said: “There are many ISA products to choose from, so savers should be able to find a product that works for them - be that flexibility with an Easy Access ISA or less flexibility but potentially better returns with fixed ISAs.”

Following a raft of personal allowance reductions and freezes, the product's popularity continues to rise. Mr. Thrower noted a 73 percent increase in new ISA accounts opened from January to May this year compared to the same period last year.

He said: “As interest rates have continued to grow many people have become acutely aware of the frozen personal savings allowance threshold and how much they can now save tax-free.

“Analysis shows that for someone on the basic rate of tax, £17,500 in a leading one-year fixed account could put them over the savings allowance, leaving them vulnerable to tax and effectively slashing their interest rate.

“Because of this, many have turned to ISAs with 55 percent more being deposited into Shawbrook’s ISAs up to May of this year. It is vital that as interest rates continue to remain high, savers look not only at the rate, but also at the type of account. Now is the time to pay attention to make the most from savings.”