Type and hit Enter to search
Main Menu
Trending News
Follow Us
📍 Quick Answer — TL;DR
A Cash ISA is a tax-free savings account. For the 2026/27 tax year, you can deposit up to £20,000 and pay zero tax on the interest. Top rates currently sit around 4.4% AER for easy access (Trading 212) and 4.12% AER for a 1-year fix (Castle Trust Bank). Your deposits are protected up to £120,000 per banking licence under the updated FSCS rules.
⚠️ Starting April 2027, the government will cap Cash ISA contributions at £12,000/year for under-65s. This tax year is your final chance to shelter a full £20,000 in cash.
📋 IN THIS GUIDE
Best Cash ISAs in the UK: 2026/27 Rates & Rules Explained
A Cash ISA (Individual Savings Account) is the simplest, safest way to grow your savings in 2026 without handing a penny of interest to HMRC. With the Bank of England base rate holding firm and top easy-access rates at 4.4% AER, the tax-free shelter of a Cash ISA has never been more valuable.
Below, we compare the market-leading rates for February 2026, break down every rule you need to know, and explain the seismic April 2027 changes that make acting this tax year absolutely critical.
⚠️ CRITICAL: Your Final Year for the Full £20,000 Cash ISA Allowance
From 6 April 2027, anyone under the age of 65 will only be permitted to contribute £12,000 per year to Cash ISAs. The remaining £8,000 of the annual allowance must go into a Stocks & Shares ISA or another investment wrapper.
If you prefer the absolute safety of cash savings, the 2026/27 tax year (ending 5 April 2027) is your last opportunity to shelter the full £20,000 in a Cash ISA. Any money deposited before that date remains permanently tax-free and is completely unaffected by the rule change.
What is a Cash ISA?
A Cash Individual Savings Account (ISA) is simply a savings account where the interest you earn is 100% tax-free. The government created the ISA wrapper to encourage UK residents to save, and any interest generated inside that wrapper is completely invisible to HMRC.
With standard savings accounts, high interest rates and frozen Income Tax thresholds mean millions of UK savers are now breaching their Personal Savings Allowance (PSA) and paying up to 45% tax on their savings interest. A Cash ISA legally shields your money from HMRC, ensuring every penny of interest stays in your pocket.
✅ Eligibility Requirements
- Must be 18 or over to open an adult Cash ISA
- Must be a UK resident for tax purposes
- Saving for a child? You need a Junior ISA →
Why it matters right now: A basic-rate taxpayer with £23,000 in a 4.5% account earns £1,035 interest — already breaching their £1,000 PSA. A higher-rate taxpayer hits their £500 PSA with just £11,200. Every pound above those thresholds is taxed at 20% or 40% — unless it's inside a Cash ISA.
Cash ISA vs Standard Savings: Tax Comparison
*Based on basic-rate taxpayer with £1,000 PSA; tax applied to interest above allowance. Illustrative only.
Cash ISA Need-to-Knows: 2026/27 Rules
Before locking your money away, these are the five vital rules you must understand for the 2026/27 tax year.
Rule 1: The £20,000 Annual Allowance
You can deposit up to £20,000 across all your ISAs combined in the 2026/27 tax year. As of the recent rule overhaul, you can now open and pay into multiple Cash ISAs in the same tax year — as long as your total deposits across all ISA types don't exceed £20,000.
Full ISA Allowances & Rules guide →Rule 2: The April 2027 Cliff-Edge Warning
From 6 April 2027, the government is introducing a £12,000 Cash ISA cap for anyone under 65. The remaining £8,000 of your allowance will have to go into a Stocks & Shares ISA or other investment ISA. If you prefer the safety of cash, 2026/27 is your final year to save a full £20,000 in a Cash ISA.
Rule 3: New £120,000 FSCS Protection Limit
As of December 2025, the Financial Services Compensation Scheme (FSCS) limit was significantly upgraded. Your savings are now protected up to £120,000 (up from £85,000) per person, per authorised banking licence. If you have more than £120,000 to protect, spread it across different banking groups — each licence gets its own £120,000 protection.
Rule 4: Flexible vs. Non-Flexible ISAs
A "Flexible" Cash ISA allows you to withdraw money and put it back in the same tax year without using up more of your annual allowance. A non-flexible ISA does not offer this — once you withdraw, that portion of your allowance is gone for the tax year. Not all banks offer flexible ISAs, so always check the terms before opening an account or making a withdrawal.
Rule 5: Never Withdraw to Transfer — Use the Official ISA Transfer
If you find a better rate elsewhere, do not manually withdraw your cash to move it. Withdrawing strips the money of its tax-free ISA wrapper permanently — that interest protection is lost. Instead, contact your new provider and ask them to complete an official "ISA Transfer." They handle the entire process, and the tax-free status of your money is fully preserved throughout. Partial transfers of current-year contributions are now also permitted.
Best Easy-Access Cash ISAs (February 2026)
Easy-access Cash ISAs are ideal for emergency funds. You can deposit and withdraw whenever you need to without paying a penalty. Because of this flexibility, rates are typically variable and track the Bank of England base rate.
⚠️ Rate disclaimer: All rates shown are accurate as of February 2026 and are subject to change. Variable rates can rise or fall in line with the Bank of England base rate. Always verify the current rate directly with the provider before opening an account.
Trading 212
🏆 MARKET LEADEREasy-Access Cash ISA — Variable Rate
FSCS Protected
✅ £120,000 per licence
Interest Paid
Daily (excellent for compounding)
Platform
App only
Minimum Deposit
£1
📍 Need to know: Money is held in partner banks (including Barclays and NatWest), so each banking licence carries its own £120,000 FSCS protection. The account is managed entirely via the Trading 212 app. It is a highly flexible account — ideal for savers who want maximum liquidity alongside the market-leading tax-free rate.
Leeds Building Society
⭐ TOP HIGH-STREET NAMEEasy-Access Cash ISA — Variable Rate
FSCS Protected
✅ £120,000 per licence
Withdrawals
Unlimited — no notice period
Platform
Online & branch
Best For
Savers preferring a trusted high-street name
✅ Why we like it: If you prefer the security and accountability of a traditional, regulated high-street building society over a fintech app, Leeds Building Society offers a highly competitive 3.96% with unlimited withdrawals — making it an excellent safe haven for cash you might need at a moment's notice.
Best Fixed-Rate Cash ISAs (February 2026)
If you have a lump sum that you definitely won't need to touch for a set period, a fixed-rate Cash ISA guarantees your interest rate. This protects you if the Bank of England decides to cut base rates later in the year.
Critical Warning Before You Fix
You cannot usually withdraw funds from a fixed-rate Cash ISA early without paying a severe penalty — typically 90 to 180 days' worth of interest. Only lock money away that you are 100% certain you will not need during the fixed term. If there is any chance you'll need the money, choose an easy-access Cash ISA instead.
Castle Trust Bank
🏆 TOP 1-YEAR FIX1-Year Fixed-Rate Cash ISA
Fixed Term
12 months
Minimum Deposit
£1,000
FSCS Protected
✅ £120,000 per licence
Early Access Penalty
⚠️ Yes — typically 90 days' interest
📍 Why it stands out: Lock in at 4.12% tax-free ahead of potential base rate cuts. This is an excellent defensive move for savers looking to shield a lump sum before the April 2027 Cash ISA cap — your money is guaranteed to earn a top rate regardless of what the Bank of England does over the next 12 months.
Close Brothers Savings
⭐ TOP 2-YEAR FIX2-Year Fixed-Rate Cash ISA
Fixed Term
24 months — secures rate into 2028
FSCS Protected
✅ £120,000 per licence
Early Access Penalty
⚠️ Yes — typically 180 days' interest
Best For
Long-term rate protection into 2028
✅ Why it's a strong choice: Securing your rate into 2028 with Close Brothers is an excellent defensive move against falling interest rates. As a fully regulated UK bank, your funds benefit from the updated £120,000 FSCS protection. Ideal for savers with a lump sum they are confident they won't need until 2028.
👴 AGED OVER 60?
Read our dedicated Over-60s ISA & Retirement Savings guide
Covers the full exemption for 65+, early-60s strategy, and retirement-specific Cash ISA tactics.
How Do Online Savings Platforms Work?
You may have noticed platforms like Raisin UK, Flagstone, or Hargreaves Lansdown Active Savings appearing prominently in rate comparisons. These are known as savings platforms or "cash savings hubs."
Instead of opening individual accounts directly with five different banks, a savings platform allows you to open one master account. From a single dashboard, you can view and move your money between dozens of partner banks — like Castle Trust, Aldermore, or OakNorth — to instantly access their best rates.
✅ Key Benefits of Savings Platforms
- Zero admin: You only prove your identity (KYC) once — across all partner banks on the platform.
- Better rates: Platforms negotiate exclusive rates with partner banks that may not be available directly.
- Stacked FSCS protection: Each partner bank retains its own £120,000 FSCS protection limit, independent of the others.
⚠️ Important: Always confirm the specific Cash ISA rules for each partner bank on the platform. Not all partner banks offer Cash ISAs — some platforms only offer standard taxable savings accounts, so verify before you deposit.
🏆 FSCS Protection: Stacking Strategy for Large Balances
The new £120,000 FSCS limit applies per person, per authorised banking licence. Savings platforms allow high-net-worth savers to protect significantly larger sums by spreading across multiple banks.
✅ A high-net-worth saver using a platform with 5 partner banks could safely protect up to £600,000 in total — with each £120,000 chunk covered by its own independent FSCS guarantee.
How to Complain About Your Savings Provider
Even the best banks make mistakes — delayed ISA transfers, unfair penalty fees, or lost interest. If you've been treated unfairly, here is the exact legal process to get your money back in the UK.
Step 1: Complain Directly to Your Provider
You must give the bank a chance to fix the issue first. Contact their complaints department via email, phone, or in-branch, and explicitly state you are making a "formal complaint." By law, the provider has 8 weeks to investigate and send you a "final response" letter.
✅ Tip: Always complain in writing (email) so you have a timestamped paper trail. Keep a copy of every response.
Step 2: Escalate to the Financial Ombudsman Service (FOS)
If you are unhappy with the bank's final response, or if the 8 weeks pass with no answer, escalate to the Financial Ombudsman Service (FOS) — a free, impartial, government-backed referee.
- You must complain to the FOS within 6 months of receiving the bank's final response letter
- The FOS service is completely free to consumers
- If the FOS rules in your favour, their decision is legally binding — the bank must pay compensation
📞 FOS Phone
0800 023 4567
Free from UK landlines and mobiles
🌐 FOS Website
financial-ombudsman.org.uk
Submit complaints online
Cash ISA FAQs
The most searched questions about Cash ISAs — answered clearly for 2026/27, optimised for AI overviews and featured snippets.
Is my money safe in a Cash ISA?
Is my money safe in a Cash ISA?
Yes. Provided your account is with a UK-regulated bank or building society, your deposits are automatically protected by the Financial Services Compensation Scheme (FSCS) up to £120,000 per person, per authorised banking licence — upgraded from £85,000 in December 2025.
✅ What the £120,000 limit means in practice
The limit applies per person, per banking licence — not per account. NatWest and RBS share the same banking licence. If you have £120,000 split across both, only £120,000 combined is protected. Always verify whether two banks share a licence before depositing large sums — check on the FSCS website or call them directly.
If you have more than £120,000 to protect, spread it across different, unconnected banking groups — each with its own separate banking licence — to ensure full FSCS coverage on the entire amount.
Does a Cash ISA affect my Personal Savings Allowance (PSA)?
Does a Cash ISA affect my Personal Savings Allowance (PSA)?
No. The Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers, £0 for additional-rate taxpayers) applies only to interest earned in standard savings accounts outside of an ISA wrapper.
Cash ISA interest does not count toward the PSA at all — it is entirely separate, always 100% tax-free, and there is no cap on how much tax-free interest you can earn inside a Cash ISA, regardless of your balance.
📍 Example: A higher-rate taxpayer with £500,000 in a Cash ISA at 4% earns £20,000 interest per year — all completely tax-free, with zero impact on their £500 PSA.
Can I have a Cash ISA and a Lifetime ISA at the same time?
Can I have a Cash ISA and a Lifetime ISA at the same time?
Yes. You can split your £20,000 annual ISA allowance across multiple types of ISAs in the same tax year — including a combination of a Cash ISA and a Lifetime ISA.
✅ Example allocation:
£4,000 → Lifetime ISA (to claim the £1,000 government bonus) + £16,000 → Cash ISA. Total: £20,000. Both accounts are active simultaneously and both grow completely tax-free.
Remember: the LISA's £4,000 annual deposit limit counts toward your £20,000 total ISA allowance, not in addition to it. Plan your split carefully to maximise both the government bonus and your tax-free cash savings.
Will I be affected by the 2027 Cash ISA limits?
Will I be affected by the 2027 Cash ISA limits?
If you will be under the age of 65 on 6 April 2027, yes — but the impact depends entirely on when you act:
What is the best easy-access Cash ISA rate right now?
What is the best easy-access Cash ISA rate right now?
As of February 2026, the market-leading easy-access Cash ISA rates are:
⚠️ Rate disclaimer: Rates are variable and subject to change. Always verify the current rate directly on the provider's website before opening an account.
Can I transfer my Cash ISA to a better rate without losing the tax-free status?
Can I transfer my Cash ISA to a better rate without losing the tax-free status?
Yes — but you must use the official ISA Transfer process. Never withdraw the money yourself to move it. Manually withdrawing strips your savings of their tax-free ISA wrapper permanently — that tax-free status cannot be restored once lost.
✅ The correct transfer process — step by step:
- Open an account with your new provider
- Complete their ISA Transfer form (not a standard deposit form)
- The new provider contacts your old provider and moves the money directly
- Your tax-free status is fully preserved throughout — no HMRC paperwork required
Under the latest rules, partial transfers of current-year contributions are now permitted — so you don't have to transfer everything at once. You can move part of your balance to chase a better rate while keeping the remainder with your original provider.
Explore More ISA Guides
Part of the complete ISA hub on TaxYZ — everything you need for tax-free saving in 2026/27.
← PARENT GUIDE
ISAs in the UK Explained
The full ISA overview — all types compared
Stocks & Shares ISAs
Long-term growth, platform comparison & strategies
Lifetime ISAs (LISA)
The 25% government bonus & first-time buyer rules
Junior ISAs
£9,000/yr tax-free savings for children
ISA Allowances & Rules
Flexible ISAs, transfer rules & 2027 cap in full
Over-60s ISA & Retirement
Full exemption for 65+, early-60s strategies
Shelter the Full £20,000 in a Cash ISA — Before the Cap Arrives
The 2026/27 tax year is your last opportunity to shield a full £20,000 in a Cash ISA if you're under 65. Top rates of 4.40% AER mean your money can work harder than ever — 100% tax-free, FSCS-protected up to £120,000.
⚖️ TaxYZ provides educational information only and does not constitute regulated financial advice. Rates shown are as of February 2026 and subject to change. Always verify the current rate directly with the provider before opening an account. FSCS protects up to £120,000 per person per authorised banking licence. Consult a qualified independent financial adviser before making savings decisions.