A Cash ISA is a type of savings account where you don’t pay any tax on the interest you earn. It’s one of the most popular types of ISA because it's simple, low-risk, and easy to open.

How a Cash ISA Works

Cash ISAs work much like normal savings accounts — but the interest is always tax-free, regardless of how much you earn. You can deposit up to your annual ISA allowance into one each tax year.

2025/26 ISA Allowance

You can save up to £20,000 in ISAs during the 2025/26 tax year. That total can be spread across different ISA types, but you can only pay into one Cash ISA per year.

Types of Cash ISAs

• Easy Access: Withdraw your money anytime, but interest rates may be lower.
• Fixed Rate: Lock your money away for a set time (e.g. 1–5 years) in exchange for higher interest.
• Regular Saver: Some providers offer monthly deposits with fixed terms and rates.
• Flexible ISAs: Withdraw and replace funds within the same tax year without affecting your allowance (check with the provider).

Cash ISA vs. Normal Savings Account

Cash ISAs used to be the go-to savings option, but things have changed:

• Most people now get a Personal Savings Allowance (£1,000 for basic-rate taxpayers), meaning many don't pay tax on savings interest anyway.
• Regular savings accounts often offer higher interest rates than Cash ISAs.

Still, if you're a higher earner or want to protect future interest from tax, a Cash ISA could be worth it.

Who Can Open a Cash ISA?

You must be:

• A UK resident for tax purposes
• Aged 16 or over

Can You Switch Providers?

Yes — you can transfer your Cash ISA to another provider for a better interest rate. Always request a formal ISA transfer to keep your tax-free status intact.

Should You Use a Cash ISA?

A Cash ISA may be a good option if:

• You’re likely to exceed your Personal Savings Allowance
• You want a tax-free home for long-term savings
• You’re risk-averse and prefer guaranteed returns

If you’re unsure which ISA is right for your goals, take our quick ISA quiz to find the best fit.

Explore Other ISA Options

If you're considering alternatives to Cash ISAs, check out our other ISA guides:

• Stocks & Shares ISA – Invest in the markets with no capital gains or dividend tax.
• Lifetime ISA – Save for your first home or retirement with a 25% bonus.
• Innovative Finance ISA – Peer-to-peer lending with higher risk and potential return.
• Junior ISA – Save tax-free for a child under 18.