Banking & Savings
Cash ISAs
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
On this page
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, your money is not invested and cannot fall in value, and savings held with an authorised provider are covered by 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.
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 & protection
- 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.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- GOV.UK, Individual Savings Accounts (ISAs): How ISAs work (opens in a new tab). Accessed 22 Aug 2026.
- GOV.UK, ISA reform 2027 factsheet (opens in a new tab). Accessed 22 Aug 2026.