Alternatives to a Cash ISA: other places to save

How much can go into a Cash ISA from April 2027?

Up to £20,000 a year, at any age, within your overall £20,000 ISA allowance. The Budget on 28 October 2026 cancelled the planned cut to £12,000 for under-65s. See the Cash ISA limit for the full story.

Your options side by side

Do you pay tax on savings outside an ISA?

Often less than you might think. Basic rate taxpayers have a £1,000 Personal Savings Allowance, higher rate taxpayers £500, and additional rate taxpayers none. If your other taxable income is below £17,570, the starting rate for savings can make up to £5,000 more interest tax-free.

At an illustrative 4% a year, £25,000 earns £1,000 of interest, exactly a basic rate taxpayer’s allowance, and £12,500 earns £500, a higher rate taxpayer’s allowance. Interest above your allowances is taxed at 20%, 40% or 45% in 2026/27, rising to 24%, 44% or 49% from 6 April 2027, as our savings tax 2027 article explains. Interest inside an ISA is never taxed.

The savings tax calculator works out the tax on your own interest in both tax years, and the ISA vs savings account calculator compares the two after tax.

A Lifetime ISA: more room for cash, with conditions

A Lifetime ISA can hold cash or investments. Its £4,000 yearly limit counts within your £20,000 allowance, so a cash Lifetime ISA can hold up to £4,000 of your yearly saving, with a 25% government bonus worth up to £1,000.

The catch is what you can use it for. You must be 18 or over but under 40 to open one, and you can pay in until you are 50. You can withdraw without a charge to buy a first home costing up to £450,000 with a mortgage, at least 12 months after your first payment, from age 60, or if you are terminally ill with less than 12 months to live. Take money out for anything else and a 25% charge applies, which can leave you with less than you paid in. The Budget on 28 October 2026 said that from 29 October 2026 a first home above £450,000 that otherwise qualifies carries a 20% charge instead. See how the Lifetime ISA works and the Lifetime ISA withdrawal charge.

Money market funds and cash in a Stocks and Shares ISA

A planned 22% charge on interest from cash held inside a Stocks and Shares or Innovative Finance ISA, and a rule that money market funds would be the only cash-like holdings, are unconfirmed after the Budget. A money market fund is an investment, not a bank deposit: its value can fall, and it does not have the FSCS deposit protection that covers a Cash ISA. Our guide to cash inside a Stocks and Shares ISA covers what we know.

Premium Bonds

Premium Bonds sit outside the ISA rules, so they do not use any of your £20,000 allowance, and you can hold up to £50,000. They pay no interest. Instead, each £1 Bond is entered into a monthly prize draw, and prizes are tax-free. NS&I’s prize fund rate, 4.35% from the September 2026 draw, is an average across all Bonds, not a rate any one saver earns, and most months most holders win nothing. Your money is backed 100% by HM Treasury. See Premium Bonds or a Cash ISA for how the two compare.

If you are saving as a couple

Each adult has their own £20,000 allowance and their own Cash ISA limit. An ISA is held in one person’s name, and the money in it belongs to them. Age no longer changes the limit, as the age-65 test belonged to the cancelled cap.

Questions to ask yourself

• When might you need the money? Easy access accounts and Premium Bonds let you get at it quickly. Fixed rate accounts lock it away for a term, and a Lifetime ISA is for a first home or retirement.
• Could you accept your money falling in value? Stocks and Shares and Innovative Finance ISAs can fall in value. Cash does not fall in value with the markets, although inflation can reduce what it buys.
• Will you pay tax on your savings interest? Many savers stay within their allowances, though the rates above them rise from 6 April 2027.