HMRC has clarified the rules around ISAs as some savers may find they have a tax bill to pay on their savings growth.

ISAs come with the benefit that all your interest earnings or investment growth within the account is tax-free - but only up to a limit.

A saver contacted HMRC over social media concerned that they had paid in too much into their ISA accounts. They explained: "I have transferred £1,000 into Virgin money on 4 April, but it was cleared on 7 April due to weekends.

"And then I have opened a new ISA account of Trading 212 with £20,000 deposit on 7 April."

A person can deposit up to £20,000 each tax year into ISAs with all funds being tax-free. The tax year ends on April 5 with the new year starting on April 6.

This means in this person's case, if their £1,000 deposit was considered as being made during the current tax year, they will have gone over after having subsequently paid in £20,000 into their new account.

In response, HMRC said: "If you oversubscribed in previous year you should not do anything and should not attempt to correct the situation. HMRC will write to you if appropriate."

However, the group said the case is different if they have gone over the limit in the current tax year. HMRC said: "If this happened in the current tax year, you should contact your ISA provider to instruct you to remove the overpayment to correct the error.

"Because those funds should never have been in the ISA, there is no tax relief and tax is therefore payable on any interest or growth."

Separate from the ISA allowance, a person on the basic rate of income tax can earn up to £1,000 in interest on their savings each year with no tax to pay on the amount. This reduces to £500 for higher rate taxpayers and down to zero for those on the additional rate.

Bank of England figures showed UK savers made net deposits of £5billion in March, including £4.2billion being deposited in cash ISAs.

Mark Hicks, head of Active Savings at , said now is the time to look around for a better rate, given wider economic uncertainties.

He said: "Easy access rates are much more sensitive to base rate falls, so while fixed terms may not have quite the same headline rate, as easy access deals get less generous fixed term rates should be more resilient.

"It means anyone who has money they don't need for a fixed period of a few months or longer should consider tying it up for a better rate.

"Given that markets now expect three rate cuts for the remainder of the year, fixed rate deals above 4% may not be around by the end of the year."

The Bank of England will meet this week (May 8) to decide on whether or not to move the base interest rate, which currently stands at 4.5%, having last been reduced from 4.75% in February this year.