Best Cash ISA Rates: Top Five Tax-Free Savings Deals for Savers
This is Money identifies five leading cash ISA options, highlighting their features and rates to help savers maximize tax-free returns.
Savers looking to shield their interest from taxation have several strong cash ISA options available, with a regular review identifying five top deals. These accounts offer tax-free interest, which is particularly beneficial as rates have been rising, potentially pushing more individuals into the savings tax net.
Understanding Cash ISAs
Each financial year, individuals receive a fresh ISA allowance for tax-free interest. For the 2026/27 financial year, this limit is £20,000, though it is set to decrease to £12,000 for those under 65 from April 2027. It is possible to transfer money between different types of ISAs, such as cash ISAs and stocks and shares ISAs, although rules regarding transfers between these types will change from April 2027. Cash ISAs provide a valuable shelter for savings, especially with current interest rates.
Transfers of old ISAs to accounts with better returns can often be more lucrative than finding the best rate for new cash. While it's possible to switch a current year's cash ISA, it is generally simpler to select the most suitable account from the outset. The tax-free interest allowance is £1,000 annually for basic-rate taxpayers and £500 for higher-rate taxpayers. However, with interest rates at current levels, a basic-rate taxpayer with over £20,000 in savings could exceed this allowance, as could a higher-rate taxpayer with over £10,000. Those in the highest tax bracket receive no savings allowance.
Top Cash ISA Picks
Trading 212 offers a flexible cash ISA with a minimum opening deposit of £1. For new customers, the rate includes a 0.91% bonus for the first 12 months, after which it drops to 3.6%. Existing customers can earn a 3.6% rate, with interest paid monthly. This account allows transfers in, with the bonus rate applying to the current tax year's contributions. Withdrawals are not limited, and the interest rate is not affected by accessing funds. Funds held with Trading 212 are FSCS protected through partner banks Barclays, NatWest, and JPMorgan, with a £120,000 limit per provider.
Plum provides an easy-access ISA with a competitive rate, also featuring flexibility that allows money to be withdrawn and replaced within the same tax year without impacting the allowance. The rate includes a 1.84% bonus, bringing the underlying rate to 2.54%. This account also offers FSCS protection up to £120,000.
For a one-year fixed-rate ISA, OakNorth Bank offers a competitive rate with a £1 minimum opening deposit. While Investec offers a higher rate of 4.68%, it requires a £1,000 minimum. High street banks like Halifax, Lloyds Bank, and Bank of Scotland offer 4.55% for a one-year fix.
Secure Trust Bank holds the top rate for a two-year fixed ISA, requiring a £1,000 minimum deposit to open.
Lifetime ISA Option
For individuals aged 18-39 saving for a first home or retirement, Moneybox offers a 5.55% rate on its lifetime ISA. This account allows a maximum of £4,000 to be saved annually, with a 25% government bonus. The rate includes a 2.75% fixed bonus for the first year. This deal is accessible only through the Moneybox app, and while it accepts transfers, it does not allow partial transfers, and it is not a flexible ISA.