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If you want to put your money into a cash ISA before the end of the tax year, you’ll want to know which accounts pay the highest rates so that your returns hopefully can keep pace with rising living costs.
More people than ever may be considering a cash ISA, given the changes announced in last year’s Budget on 26 November. These will see the amount under-65s can pay into cash ISAs capped at £12,000 with effect from 2027. You can read more about these changes in our article What changes to cash ISAS could mean for you.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The cash ISA will be in major demand. The fact that the Budget confirmed plans to cut the cash ISA allowance for those under the age of 65 to £12,000 a year from 2027 will mean more people want to make the most of this year’s allowance, and next year’s.
“For those who were unable to use their allowance ahead of the Budget, the last few months of the tax year will be a key opportunity.”
Here, we explain how cash ISAs work, and which providers currently offer the most competitive accounts.
What is a cash ISA?
Cash ISAs work in much the same way as standard savings accounts, but the interest you earn is always tax-free.
At the start of every tax year, you are given a new annual ISA allowance which, for the current 2025/26 tax year, is £20,000. It will remain at £20,000 in the 2026/27 tax year. Once you’ve reached this limit then you can’t put any more money into ISAs until the next tax year starts.
Under current rules, you can put your whole allowance into a cash ISA, or you can put it in a stocks and shares ISA or a peer-to-peer lending ISA. Alternatively, you can split your allowance between all three of these.
If you don’t use your whole ISA allowance each year, you can’t roll the unused part over to the next tax year. For example, if you put away £15,000 this year, the remaining unused £5,000 of your allowance is wiped when the new tax year starts
You can find out more about cash ISAs and whether this type of account might be suitable for you in our article How cash ISAs work.
Fixed rate cash ISAs
You usually, but not always, get a higher rate of interest on fixed rate cash ISAs compared to easy access ISAs. As the name suggests, fixed rate ISAs pay a fixed return for a set period of time. You normally can’t take money out of these accounts until the end of the term.
More importantly, you often only have a month or so to pay money into these accounts, once opened. You can’t normally top them up or pay into them on a monthly basis.
Current best buys are as follows:
Top 5 1-Year Fixed Rate ISAs
Top 5 2-Year Fixed Rate ISAs
Top 5 3-Year Fixed Rate ISAs
Top 5 5-Year Fixed Rate ISAs
Variable rate cash ISAs
If you’d rather not tie up your cash savings, and prefer to have your money readily accessible in the event of an emergency, a variable rate cash ISA is likely to be your best bet.
Current best buy instant access cash ISAs include:
Top 5 Easy Access ISAs
Remember…
Once you’ve chosen a cash ISA account, you can’t simply deposit your money and forget about it. Rates change constantly, so you’ll need to keep an eye on how much interest you’re earning and move your money if you can find better returns elsewhere.
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