How Cash ISAs work
- A Cash ISA lets you save money tax-free - the interest you earn is usually free from UK income tax.
- The ISA allowance is the total you can pay in each tax year (6 April to 5 April).
- The current allowance is £20,000 across all ISA types.
- You can pay into ISAs in a way that suits you.
For example, you could...
| How you can use your allowance | Example |
|---|---|
| Use your allowance in one go | £20,000 into one Easy Access Cash ISA |
| Split your allowance across ISAs | £10,000 into an Easy Access Cash ISA + £10,000 into a Fixed Rate Cash ISA |
| Mix monthly and lump sum payments | £500 per month + £14,000 lump sum |
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Important
As long as your total payments stay within £20,000. Some providers may have minimum or maximum deposit rules, but these vary by account.
Comparing Cash ISAs
Different types of ISAs suit different goals. Here's a quick overview:
| Feature | Easy Access Cash ISA | Fixed Rate ISA | Lifetime ISA |
|---|---|---|---|
| Access to money | Withdraw anytime | Limited access | Restrictions apply |
| Interest type | Variable rate | Fixed rate | Variable + 25% bonus |
| Best for | Short-term / emergencies | Fixed-term savings (1+ year) | First home / later life |
| Government bonus | - | - | 25% bonus |
| Annual limit | Up to £20,000 | Up to £20,000 | £4,000 (part of £20,000) |
| Key rules | - | Limited-time opening periods | Withdrawal rules and restrictions |
Ready to choose an account?
Frequently asked questions
Up to £20,000 per tax year across all your ISAs combined.
Yes. You can save monthly, as a lump sum or a combination of both.
Yes. You can pay into multiple ISAs in the same tax year, as long as you stay within the £20,000 limit.
Yes. You can divide your £20,000 allowance across different ISA types.
Any amount over £20,000 won't qualify for tax-free status.
Your provider will usually report it to HMRC, and it will be corrected. This might mean:
- Removing the extra amount.
- Reversing any tax benefits on it.
It's normally easy to fix - but it's worth keeping track of what you pay into your ISAs.
Yes. The government can change the ISA allowance in future tax years. Any changes normally come in at the start of a new tax year in April.
- You lose any unused allowance.
- It doesn't carry forward.
- Your allowance resets each tax year.
For example:
- You use £8,000 of your ISA allowance.
- The remaining £12,000 is lost at the end of the tax year.
Yes. Interest earned inside a Cash ISA is usually free from UK income tax.