Cash ISAs shelter savings interest from tax, but allowances and account terms matter.
Last checked: 27 September 2026
The current ISA allowance
For the 2026/27 tax year, the overall ISA subscription limit is £20,000. Interest earned inside a Cash ISA is tax-free. Your overall allowance can be split across eligible ISA types, subject to their individual rules.
A Cash ISA is not automatically the best-paying cash account
Compare the interest rate, access, penalties and guarantees with ordinary savings accounts. Depending on your tax position and savings interest, the tax wrapper may be more or less valuable to you.
A change is coming in April 2027
From 6 April 2027, the annual Cash ISA subscription limit for people under 65 is due to fall to £12,000 within the £20,000 overall ISA limit. People aged 65 or over will retain a £20,000 Cash ISA limit. Because rules can change, check GOV.UK before acting.
Withdrawals can work differently
Some ISAs are flexible. With a flexible ISA, qualifying withdrawals can be replaced in the same tax year without using additional allowance; non-flexible accounts do not work the same way. Check the provider's terms.
Cash ISA or easy-access savings for an emergency fund?
A Cash ISA can protect eligible savings interest from UK income tax, but that does not automatically make it the best home for emergency cash. Compare the actual interest rate, access restrictions and whether withdrawals affect your ability to replace money within your allowance. A competitive easy-access savings account may be more suitable for some people.
For example, £2,000 earning 4% for a full year would generate about £80 interest before any applicable tax. The amount of tax, if any, depends on your circumstances and other savings interest; this example does not assume a particular tax band or that the rate stays unchanged.