Martin Lewis Best 1 Year Fixed-Rate ISA (February 2026 Update)

TL;DR: As of February 2026, the best 1-year fixed-rate Cash ISAs are offering between 4.10% and 4.45% AER. The annual ISA allowance for the 2025/26 tax year is £20,000. These accounts are best for savers who want a guaranteed, tax-free return and can commit their funds until February 2027.

What is the best 1-year fixed-rate Cash ISA in 2026?

The “best” ISA depends on your deposit amount and whether you need to transfer existing ISA funds. 1-year fixed-rate Cash ISA is a UK savings account that locks in a guaranteed interest rate for 12 months.

• Benefit: It protects you against falling interest rates during the 12-month term.
• Tax Status: Interest earned is tax-free within the annual £20,000 allowance.
• Restrictions: Withdrawals are normally restricted; early access triggers an interest penalty (usually 90–180 days).

Based on current market data, these are the leading providers:

Top 1-Year Fixed Cash ISA Rates (2026)

Note: All providers listed are FSCS Protected, meaning up to £85,000 of your savings are legally guaranteed by the UK government.

How does a 1-year fixed-rate Cash ISA work?

A 12-month fixed Cash ISA is designed for certainty. Key mechanics include:

• Rate Lock: Prevents your return from being cut even if the BoE reduces base rates.
• One-Off Deposit: Most require one upfront deposit during the “funding window.”
• Interest Payout: Usually paid monthly or at “maturity” (the end of the year).
• Suitability: Best for money you do not need to touch for at least 12 months.

Example Calculation

• Deposit: £20,000 | Rate: 4.40% AER | Term: 12 months
• Interest Earned: £880.00 (Tax-free)
• Maturity Value: £20,880.00
• Early Access Cost: If withdrawn with a 120-day penalty (~0.33 years), the penalty is approx £290, leaving you with £590 interest.

Comparisons: ISA vs. Standard Savings (2026)

Fixed ISA vs. Easy Access ISA

Fixed ISA vs. Standard Fixed Bond

Is a Fixed ISA Financially Worth It for You?

Scenario 1: The Higher-Rate Taxpayer (£30,000 savings)

You are likely to exceed your £500 Personal Savings Allowance (PSA). A fixed ISA is a strong win here as it protects the full interest from 40% tax.

Scenario 2: The Basic-Rate Taxpayer (£10,000 savings)

At 4.40%, you’ll earn £440. This is within your £1,000 PSA. A standard fixed bond might pay slightly more (e.g., 4.8%), so compare net returns before committing.

Scenario 3: The Emergency Fund Saver

If you might need the money for a car repair or boiler fix, the 180-day interest penalty on a fixed ISA makes it unsuitable. Stick to Easy Access.

Maximising Your ISA Allowance Before 5 April 2026

The £20,000 limit is “use it or lose it.” You can split your allowance across:

• Cash ISA: (The focus of this guide)
• Stocks & Shares ISA: For long-term investing.
• Innovative Finance ISA: Peer-to-peer lending.
• Lifetime ISA (LISA): Max £4,000/year. Includes a 25% government bonus (max £1,000/year). Note the £450k property cap.
• Junior ISA: A separate £9,000 limit for under-18s (locked until they are 18).

Transferring Existing ISAs

To keep your tax-free status, never withdraw the money yourself.

1. Previous Years: Can be transferred in part or full.
2. Current Year: Usually must be transferred in full.
3. The Process: Use the new provider’s official transfer form.
4. Warning: Check your current provider for “exit penalties” if you are leaving a fixed-rate deal early.

Provider Due Diligence Checklist

Before you hit “Apply,” check these five points:

• [ ] FSCS Status: Is the brand individually authorized?
• [ ] Shared Licences: Do they share a licence with another bank you use (e.g., First Direct & HSBC)?
• [ ] Penalty Terms: Is it 90, 120, or 180 days?
• [ ] Maturity Handling: Will they auto-reinvest you into a low-paying account?
• [ ] Minimum Deposit: Does it match your available cash?

People Also Ask (PAA) & FAQs

What is the best 1 year fixed ISA rate in February 2026?

Top rates are typically between 4.20% and 4.45% AER as of February 2026. Rates fluctuate weekly, so comparison sites and provider websites should be checked before applying.

Is the £20,000 ISA allowance changing in 2026?

No. The ISA allowance remains £20,000 for the 2025/26 tax year, ending 5 April 2026. Any unused allowance is lost after that date.

Can I withdraw from a 1 year fixed-rate ISA early?

Yes, but most providers charge 90–180 days’ interest as a penalty. In some cases, this can reduce capital if insufficient interest has accrued.

Are fixed-rate ISAs protected if the bank fails?

Yes. Eligible deposits are protected up to £85,000 per person, per banking licence under the Financial Services Compensation Scheme.

Is a fixed ISA better than an easy access ISA in 2026?

It depends. Fixed ISAs guarantee the rate for 12 months. Easy access ISAs may currently pay up to 4.75%, but rates can be reduced at short notice.

Do ISA transfers affect my £20,000 allowance?

Transfers of previous years’ ISAs do not affect the allowance. Transfers of current-year subscriptions usually must be done in full and do not reduce your allowance if processed correctly.

What happens when a fixed ISA matures?

At maturity, funds are either:

• Paid into a nominated account
• Moved to an easy-access ISA
• Automatically reinvested (if instructed)

Always provide maturity instructions to avoid default lower rates.