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Benefits of a Cash ISA

Benefits of a cash ISA

  • Tax-free - you won't be asked to pay any tax on the interest you earn from the cash in your ISA.
  • No need to declare - you don't need to declare your cash ISA on your tax return.
  • Easy access - instant access cash ISAs offer a convenient way to save at a good interest rate while retaining easy access to your cash.
  • Straightforward transfers - you can transfer your cash ISA to a different provider to get a better rate of interest.
  • A cash ISA is a simple way get a good return on your money through tax-free interest, particularly if you're a novice when it comes to choosing savings accounts. In the current economic climate it's more important than ever to have some money stashed away for a rainy day.

Choosing the best deal for you

There are several factors to consider when choosing a cash ISA:

  • Do you want easy access to your money? An instant access ISA might be the right choice for you, as long as you're willing to accept a slightly lower rate of interest.
  • Are you happy to lock away cash for a set period of time? Fixed-rate cash ISAs might be a better option as they have the potential to offer a greater return long-term.
  • Do you have a lump sum to invest, or are you planning to make small regular payments? Different ISA providers offer different minimum deposits ranging from just one pound to several thousand pounds.
  • There is no single 'right' cash ISA choice for everyone - it's a case of weighing up the different factors and considering which product and provider best meets your overall needs. Use our cash ISA rates tables to compare different providers, research your options, and ensure you get a good savings rate.

How much tax will I save through a cash ISA?

Using your cash ISA allowance saves you money by allowing you to keep 100% of any interest you earn. Compare this to the usual tax rates on savings:

  • Saving rate taxpayers - you would usually pay 10% tax on interest earned from your savings. In a cash ISA this savings interest is tax-free.
  • Basic rate taxpayers - you would usually pay 20% tax on interest earned from savings. In a cash ISA this savings interest is tax-free.
  • Higher rate taxpayers - you would usually pay 40% tax on interest earned from savings. In a cash ISA this savings interest is tax-free.
  • Additional higher rate taxpayers - you would usually pay 50% tax on interest earned from savings. In a cash ISA this savings interest is tax-free.
  • The above information gives you a general idea of what you could save - remember that it depends on your individual circumstances and may be subject to change in the future.

You are free to transfer your cash ISA at any time, making it easy to move your money around providers and ensure the most competitive rates. Bear in mind that if you try to do this by withdrawing your cash and then opening another ISA, you will lose all your tax-free benefits. To transfer an ISA without losing out, speak to your new provider, who will arrange the transfer of funds from your old cash ISA provider.

Lifetime ISAs

Save for your first home and retirement

Compare Lifetime ISAs

Junior ISAs

Invest for your child’s future

Compare Junior ISAs: 

Stocks & Shares ISAs

Invest tax-free in stocks and shares 

Compare Stocks and Shares ISAs:

Latest News

5 Considerations for Your Next Investment ISA

15th March 2021

You've decided to invest your savings into a Stocks and Shares ISA. You'll be using your tax-free ISA allowance for this year before the deadline, while also investing your money for your future. But what do you need to consider before opening an account? We've put together a list of our top five considerations for you to think about before you click "apply". 

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