# Cash ISAs

> How cash ISAs work, the annual ISA allowance, the different types of ISA and how transferring works.

Canonical page: [/banking-savings/cash-isas](/banking-savings/cash-isas/) · Last reviewed: 2026-08-22

A cash ISA is a savings account where the interest is always tax-free. Here is how the allowance works and what to check before opening one.

## Key information

- Interest earned in a cash ISA is tax-free
- The ISA allowance is £20,000 per tax year (2026/27)
- You can transfer ISAs between providers without losing the tax benefit
- A planned change from April 2027 will reduce the cash-ISA portion of the allowance for many savers

## What is a cash ISA?

ISA stands for Individual Savings Account. A cash ISA works like an ordinary savings account, except that the interest is free of UK income tax. You can hold easy-access, fixed-rate or notice cash ISAs, just as with normal savings. Unlike [a stocks & shares ISA](/investing-pensions/stocks-shares-isas), your money is not invested and cannot fall in value, and savings held with an authorised provider are covered by [FSCS protection](/banking-savings/fscs-protection) up to £120,000.

## The ISA allowance

There is a limit on how much you can pay into ISAs each tax year, known as the ISA allowance. For the 2026/27 tax year it is £20,000 across all your ISAs combined. The tax year runs from 6 April to 5 April. Because ISA interest is always tax-free, a cash ISA can still be useful once you have used up your [Personal Savings Allowance](/banking-savings/savings-accounts#tax-on-savings-interest).

The Government has announced that from April 2027 the amount of the allowance that can go into a cash ISA will be reduced for many savers, while the overall £20,000 ISA allowance is expected to stay the same. Check the current rules before you plan large deposits, as figures and rules can change.

## Transferring an ISA

You can move an existing ISA to a new provider to get a better rate without losing its tax-free status. Always use the new provider’s ISA transfer process rather than withdrawing the money yourself — withdrawing it can mean it loses its ISA status and counts against your allowance again.

## Your rights

- Money in a cash ISA with an authorised UK provider is normally protected up to £120,000 per person, per firm, by the FSCS.
- Providers must give clear information about the rate, conditions and transfer process.

## Official sources

- [GOV.UK — how ISAs work](https://www.gov.uk/individual-savings-accounts)
- [Check your money is protected (FSCS)](https://www.fscs.org.uk/what-we-cover/)

## Related

- [Savings Accounts](/banking-savings/savings-accounts/)
- [Interest Rates Explained](/banking-savings/interest-rates/)
- [Stocks & Shares ISAs](/investing-pensions/stocks-shares-isas/)
- [FSCS Protection](/banking-savings/fscs-protection/)

## Sources

- GOV.UK — [Individual Savings Accounts (ISAs): How ISAs work](https://www.gov.uk/individual-savings-accounts/how-isas-work) (accessed 2026-08-22)
- GOV.UK — [ISA reform 2027 factsheet](https://www.gov.uk/government/publications/fiscal-events-2026-factsheets/isa-reform-2027-anti-circumvention-rules-factsheet) (accessed 2026-08-22)