The new tax year is here - which ISA will you pick?

The rise gives considerably more leeway for tax-free savings, but is it still worth paying into an ISA?

The introduction of the personal savings allowance last year has taken most people out of paying any tax on their savings interest altogether.

Traditionally, ISAs were the place where you put your cash to ring-fence it from the taxman, but now you can put the money in a variety of places and not have to pay tax on the interest.

The benefit of ISAs is that as long as the money stays in one, it is sheltered from the taxman year after year.

With the personal savings allowance, you may not be paying tax on interest earned from non-ISA accounts now, but that may not necessarily be the case forever.

For example, if interest rates start to become more generous in years to come, a saver could be pushed over the personal savings allowance threshold.

Choosing an ISA is not quite as straightforward as it used to be. It is no longer simply a choice between a cash or a stocks and shares ISA, with a whole suites of products now in the market to choose from.

A standard ISA is the traditional cash or stocks and shares product. Some ISA providers will even allow you to withdraw ISA cash without it affecting your annual allowance as long as you replace the money within the same tax year.

A new entrant to the ISA market is the Lifetime ISA, otherwise known as LISA, which was launched on April 6 and allows people to save for their first home or their retirement in the same pot.

You can open an account if you are aged 18 or over, but under 40. Savers can pay in up to £4,000 a year and get a Government bonus of 25 per cent of the money you put in, up to a maximum of £1,000 a year.

Another product designed for those saving for their first home is the Help to Buy ISA, which like the LISA comes with a Government bonus.

The minimum bonus is £400 and to be able to claim it savers will have to have a balance of at least £1,600. The maximum Government bonus is £3,000 and to receive that you need to have saved £12,000.

Junior ISAs are available for children aged under 18. Parents can open an account on behalf of their child, who can either withdraw the money when they reach 18 or carry on saving it.

for more adventurous savers there are also Innovative Finance ISAs, which put a tax-free wrapper around money invested through peer-to-peer lenders.

The potential returns on offer may be higher than with a standard cash ISA, but there are also generally greater risks involved which need to be considered.

Most importantly, although most peer-to-peer platforms encourage investors to spread their risk across a portfolio of loans, there is a chance that investments will go down due to borrowers defaulting.

ISAs may have tax advantages but the interest rates currently on offer remain uninspiring.

The average rate offered on an easy access ISA has fallen from 1.05 per cent to 0.62 per cent in the last 12 months, according to financial information website Moneyfacts.

That said, Rachel Springall, a finance expert at Moneyfacts, said: "Fixed rate ISAs have improved slightly over the last couple of weeks during the peak of ISA season - which is great news."

For anyone looking for a slightly higher interest who does not mind locking their cash away, the Government's new investment bond has now launched.

The product, which has an interest rate of 2.2 per cent is part of the suite of products offered by state-owned savings bank NS&I.

Having been unveiled in the Government's Autumn Statement, the bond is only available to buy online and while its rate is market leading it is still below the Consumer Price Index (CPI) rate of inflation, which currently stands at 2.3 per cent.

Savers can put between £100 and £3,000 into the bond and the 2.2 per cent rate is fixed for three years. The bond will be on sale at nsandi.com for the next 12 months.