1-Year Fixed-Rate Cash ISAs: How They Work (2026/27)

A 1-year fixed-rate cash ISA keeps your money in the account for 12 months at a rate set at the start, and the interest is tax-free. You can pay in up to the £20,000 ISA allowance for 2026/27. Closing early can cost you: NatWest’s fixed ISA, for example, charges the lower of the interest earned or 90 days’ interest.

Tax year 2026/27. Updated for the Autumn Budget of 28 October 2026. Last reviewed 1 November 2026.

Table of Contents

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

You pay in a lump sum, and the provider pays a rate that is fixed for the term. The fixed term is the point of the account, so NatWest, for example, stops you adding money after the start date. Its fixed rate ISA page, read on 27 October 2026, says the same and that accessing the money early means closing the account. At the end of the term NatWest converts the account to a NatWest cash ISA. Other providers differ, so read the terms of the one you are considering.

Can I take money out early?

Possibly, but expect a charge. A fixed ISA is not the same as a flexible ISA. GOV.UK explains that if an ISA is flexible, you can take cash out and put it back in the same tax year without using more of that year’s allowance, and your provider can tell you whether yours is flexible. Fixed terms often do not work that way, so check the terms.

NatWest’s wording shows what an early closure charge can look like: the charge is the lower of the interest earned on the account or 90 days’ interest, and it is deducted from the balance. If you close after 30 days, you have earned 30 days of interest, which is less than 90 days, so the most the charge can take is the interest you have earned. Moving the ISA to another provider before the term ends also triggers the charge. Another provider may use different terms.

How does the 2026/27 ISA limit apply to a fixed ISA?

The GOV.UK ISA guide gives £20,000 across all your ISAs in 2026/27, and you can split it across several accounts. Its example has £10,000 in one cash ISA, £3,000 in another cash ISA and £7,000 in a stocks and shares ISA. A fixed ISA opened this year uses this year’s allowance, and unused allowance cannot be carried forward.

The Autumn Budget on 28 October 2026 scrapped the planned £12,000 cash ISA limit for savers aged 64 or under, so the whole £20,000 can go into cash ISAs at any age, now and from 6 April 2027 (Which?; MoneySavingExpert). The regulations that set the limit (SI 2026/1018) were made on 10 September 2026. We could not find legislation reversing them when we last checked, so confirm the current rules on the GOV.UK ISA page. See using your £20,000 allowance in 2026/27 and the over-60s guide for the detail.

Is the interest taxed?

Not inside an ISA. GOV.UK says you do not pay tax on interest on cash in an ISA, and you do not need to declare it on a tax return. A fixed bond held outside an ISA is different: interest above your Personal Savings Allowance is taxed. GOV.UK gives that allowance as £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, with none for additional rate taxpayers.

How do I move an existing ISA into a fixed ISA?

Fill in the new provider’s ISA transfer form. Do not withdraw the money first, because GOV.UK says you would not be able to pay that part of your allowance back in. Transfers between cash ISAs should take no longer than 15 working days. A fixed ISA may have a cut-off date for receiving transfers, so ask early: NatWest’s page lists specific dates by which transfer requests must arrive. For moves from cash into investments see transferring a cash ISA to stocks and shares.

Is my money protected if the bank fails?

A cash ISA is a bank or building society account, so the Financial Services Compensation Scheme (FSCS) protects it up to £120,000 per eligible person, per bank, building society or credit union. Banks that share a banking licence count as one bank, so the limit applies to the total you hold across them.

What should I check before opening one?

The date the term ends and what happens to the money then.
The minimum deposit and the last date the money must arrive.
The early closure charge, in the provider’s own words.
Whether it accepts transfers in, and the cut-off date for them.
Which bank licence holds the money, if you already have savings with the same group.

Where can I compare current rates?

We do not print rates because they change too quickly. MoneySavingExpert keeps a best cash ISAs page, which was dated 26 October 2026 when we read it. Use it, or the provider’s own page, to compare rates, and then check the terms above.

Frequently asked questions

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

No. The ISA allowance is £20,000 for the 2026/27 tax year, and the whole of it can go into cash ISAs. The Autumn Budget on 28 October 2026 scrapped the planned £12,000 cash ISA limit, so the same applies from 6 April 2027.

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

It depends on the provider’s terms. Some fixed ISAs do not allow withdrawals, and taking the money out means closing the account and paying a charge. NatWest’s fixed rate ISA, for example, charges the lower of the interest earned or 90 days’ interest. Read the early closure terms before you open one.

Are fixed-rate ISAs protected if the bank fails?

Yes, up to the FSCS limit. Eligible deposits are protected up to £120,000 per person, per bank, building society or credit union. Shared banking licences affect how much compensation you get, so check the licence on the FSCS website if you hold money with several brands.

Do ISA transfers affect my £20,000 allowance?

Not if you use the new provider’s ISA transfer form. GOV.UK says that if you withdraw the money yourself, you cannot pay that part of your tax-free allowance back in. A withdrawal and a new deposit would then use up allowance that a transfer would not.

Is a fixed ISA better than an easy-access ISA?

Neither is better for everyone. A fixed ISA gives a rate that is set for the term, but you generally cannot reach the money without closing the account. An easy-access ISA lets you withdraw, but the rate can change. Compare both on the provider’s own pages before you choose.