What is a cash ISA?

A cash ISA is a savings account where the interest is free of UK Income Tax. In 2026/27 you can pay in up to £20,000; from 06/04/2027 the cash ISA limit falls to £12,000 a year for people aged under 65.

ISA allowance: £20,000; Total across all your adult ISAs in the tax year. The government has said it will stay at £20,000 until 05/04/2031.; GOV.UK: Individual Savings Accounts (ISAs)
Cash ISA limit from 06/04/2027 (under 65): £12,000; Applies from the 2027/28 tax year to people aged 64 or under at the end of the tax year. People aged 65 or over keep a £20,000 cash ISA limit. The overall ISA allowance stays £20,000. Made law by SI 2026/1018 on 10/09/2026.; legislation.gov.uk: The Individual Savings Account (Amendment) (No. 2) Regulations 2026 (SI 2026/1018)
Personal Savings Allowance: £1,000 / £500 / £0; Tax-free savings interest for basic, higher and additional rate taxpayers respectively.; GOV.UK: Tax on savings interest (how much is tax free)
FSCS deposit protection: £120,000; Per eligible person, per authorised bank, building society or credit union, from 01/12/2025 (it was £85,000 before). Includes cash ISAs.; FSCS: Banks, building societies and credit unions

Tax year 2026/27. Checked 22/09/2026.

How it works

A cash ISA is a savings account with a bank, building society or credit union (some National Savings and Investments products also qualify). Interest is paid in the usual way, but it is free of Income Tax and does not need to go on a tax return.

Providers offer different kinds, such as easy-access accounts, notice accounts (where you give notice before withdrawing) and fixed-rate accounts (where the rate is fixed for a set term, often with a charge for early withdrawal). The rules for each are in the account’s terms.

The tax difference compared with an ordinary savings account

Interest on ordinary savings is taxable, but most people have tax-free allowances. In 2026/27 the Personal Savings Allowance lets basic rate taxpayers earn £1,000 of interest tax-free, higher rate taxpayers £500 and additional rate taxpayers nothing. People whose other taxable income is under £17,570 may also get the starting rate for savings of up to £5,000.

Interest above these allowances is taxed at your Income Tax rate. From 06/04/2027 the Finance Act 2026 sets separate savings rates of 22%, 42% and 47%, two percentage points higher than now.

Whether a cash ISA saves any tax therefore depends on how much interest you earn and your tax band. Tax treatment depends on individual circumstances and tax rules can change.

How much you can pay in for 2026/27

For the 2026/27 tax year (06/04/2026 to 05/04/2027) you can pay up to the full £20,000 ISA allowance into cash ISAs, whatever your age. You can split it across more than one cash ISA, for example £10,000 in one and £3,000 in another.

Confirmed change: £12,000 cash ISA limit from 06/04/2027

This change is law. The Individual Savings Account (Amendment) (No. 2) Regulations 2026 were made on 10/09/2026, laid before Parliament on 14/09/2026, and come into force on 06/04/2027. The change was first announced at Budget 2025.

If you are 64 or under at the end of a tax year, the most you can pay into cash ISAs in that year is £12,000.
If you are 65 or over by the end of the tax year, the cash ISA limit stays at £20,000.
The overall ISA allowance stays at £20,000, so someone under 65 can still use the other £8,000 in other types of ISA.
The limit applies to new money paid in each year. It does not reduce savings already held in cash ISAs, and money can still be moved between cash ISAs, or from a cash ISA into a stocks and shares ISA.
Transfers from a stocks and shares ISA or innovative finance ISA into a cash ISA are not allowed unless you are 65 or over by the end of the tax year.
Interest on uninvested cash held inside a stocks and shares ISA or innovative finance ISA will be subject to a flat charge at the savings basic rate (22% in 2027/28), so those ISAs cannot be used to get round the cash limit.

Protection

The FSCS treats money in a cash ISA as a deposit. If a UK-authorised bank, building society or credit union fails, the FSCS protects up to £120,000 per person, per firm. The limit rose from £85,000 on 01/12/2025.

The limit applies to everything you hold with that firm added together. If several brands share one banking licence, they count as one firm. Certain temporary high balances, for example from a house sale, are protected up to £1.4 million for up to six months.

Cash and inflation

The balance of a cash ISA does not fall in pounds, but if the interest rate is lower than inflation, the money buys less over time. The guide on cash savings and inflation explains how this works.

Which kind of account fits depends on when the money may be needed and other circumstances. MoneyHelper offers free, impartial guidance.

Questions people ask

›Is interest on a cash ISA taxable?

No. Interest earned in a cash ISA is free of UK Income Tax and does not count towards your Personal Savings Allowance.

›How much can I put in a cash ISA in 2026/27?

Up to £20,000 in total across all your ISAs for the tax year ending 05/04/2027, and all of it can go into cash ISAs.

›What is changing for cash ISAs in April 2027?

From 06/04/2027, people aged 64 or under at the end of the tax year can pay no more than £12,000 a year into cash ISAs. The overall ISA allowance stays at £20,000. This is set by SI 2026/1018, made on 10/09/2026.

›Does the £12,000 limit apply if I am 65 or over?

No. If you are 65 or over by the end of the tax year, you can still pay up to £20,000 a year into cash ISAs, and you can transfer money from a stocks and shares ISA into a cash ISA.

›Is my cash ISA protected if the bank fails?

Yes, if the bank, building society or credit union is authorised in the UK. The FSCS protects up to £120,000 per person, per firm, across all your deposits with that firm.

Related guides

Sources

This is information, not advice. Tax treatment depends on your circumstances and can change. For free, impartial guidance, MoneyHelper (backed by the government) can help; for a personal recommendation, speak to a regulated financial adviser.