What is a Cash ISA? How it works, limits and who can open

What is a Cash ISA and how does it work?

A Cash ISA is a savings account held inside an ISA, so you pay no tax on the interest. You can pay in up to your ISA allowance, which is £20,000 across all your ISAs for 2026/27, and you must be 18 or over to open one.

The short answer

A Cash ISA is a savings account with ISA tax treatment. gov.uk says you do not pay tax on interest on cash in an ISA.

You must be 18 or over and, in most cases, a UK resident. The £20,000 allowance for 2026/27 is shared across all your ISAs.

The Cash ISA limit stays £20,000. A planned cut to £12,000 for savers 64 or under from 6 April 2027 was cancelled in the Budget on 28 October 2026.

The FSCS protects Cash ISA deposits up to £120,000 per person, per banking licence, if a UK-authorised provider fails.

What is a Cash ISA?

A Cash ISA is a savings account held inside an ISA, so the interest you earn is tax-free. gov.uk says you do not pay tax on interest on cash in an ISA, and that Cash ISAs can include savings in bank and building society accounts. If you complete a tax return, you do not need to declare any ISA interest on it. For worked examples in pounds, see how much interest £10,000 or £20,000 earns in a Cash ISA.

A Cash ISA holds cash. A Stocks and Shares ISA holds investments instead, and with investments your capital is at risk. See Cash ISA or Stocks and Shares ISA.

Cash ISAs at a glance

Tax on interest: None; Inside a Cash ISA, with no need to declare it
Minimum age to open one: 18
ISA allowance, 2026/27: £20,000; Shared across all your ISAs
FSCS protection: £120,000; Per person, per banking licence

How does a Cash ISA work?

You open one with a provider, pay in up to your allowance, and the interest stays tax-free for as long as the money stays in the ISA.

Opening. You can open one with a bank, building society, credit union or another financial institution. You need your National Insurance number.
Paying in. Every tax year, which runs from 6 April to 5 April, you can save up to £20,000 in one account or split the allowance across several accounts.
Staying tax-free. gov.uk says your ISAs do not close when the tax year finishes, and you keep your savings tax-free for as long as you keep the money in your ISA accounts.
Taking money out. gov.uk says you can take money out at any time without losing any tax benefits. Check your account’s terms for rules or charges.

Who can open a Cash ISA?

You must be 18 or over. gov.uk says: “You must be 18 or over to open an ISA.” You must also be a UK resident. gov.uk makes an exception for members of the armed forces and Crown servants, such as diplomatic or overseas Civil Service staff, and their spouses or civil partners, if they do not live in the UK.

You need your National Insurance number to open one. An ISA can only be held by one person, so there is no joint Cash ISA: gov.uk says you cannot hold an ISA with someone else. You do not need a current account under the ISA rules, although some banks offer their Cash ISAs only to their own current account customers: see do you need a current account to open a Cash ISA.

What about 16 and 17 year olds? Before 6 April 2024, 16 and 17 year olds could open a Cash ISA. HMRC’s guidance for providers says that from 6 April 2024 an investor must be 18 or over to subscribe to any type of ISA, and that the transitional arrangements for 16 and 17 year olds ended at 11:59pm on 5 April 2026. Under 18s can have a Junior ISA instead. gov.uk says 16 and 17 year olds can open their own.

How much can you pay into a Cash ISA?

Up to £20,000 a year for 2026/27, but that is the limit across all your ISAs, not only Cash ISAs. gov.uk says the most you can save in ISAs in the 2026 to 2027 tax year is £20,000, in one account or split across several. Since 6 April 2024 you can pay into more than one Cash ISA in the same tax year, as long as your total stays within the limit. See how many ISAs you can have.

The Cash ISA part stays £20,000 as well. The Individual Savings Account (Amendment) (No. 2) Regulations 2026, made on 10 September 2026, had set a £12,000 limit from 6 April 2027 for anyone 64 or under at the end of the tax year. The Budget on 28 October 2026 cancelled that cut: HM Treasury’s Budget document says the government decided not to reduce the cash ISA limit, and its tax overview says regulations will be laid in November 2026. See the Cash ISA limit.

What types of Cash ISA are there?

Cash ISAs usually come as easy access, notice or fixed rate accounts, and they differ in how you get your money out. The FCA’s cash savings market study describes how each works.

Type	How it works	Compare
Easy access	Few or no restrictions on withdrawals. The rate is usually variable.	Easy access Cash ISAs
Notice	You give a set amount of notice before you take money out. Withdrawals before the notice period ends usually incur a penalty.	Notice Cash ISAs
Fixed rate	The rate is fixed for a set term, which tends to range from one to five years. Withdrawals during the term usually incur a charge.	Fixed rate Cash ISAs

A flexible Cash ISA is a feature rather than a type. gov.uk says that if your ISA is flexible, you can take out cash then put it back in during the same tax year without reducing that year’s allowance, and that your provider can tell you if it is. See flexible ISAs.

Can you transfer a Cash ISA?

Yes. gov.uk says you can transfer all or part of your ISA savings from one provider to another at any time, to the same type of ISA or a different one. Contact the provider you want to move to and fill out an ISA transfer form. gov.uk says transfers between Cash ISAs should take no longer than 15 working days.

Do not withdraw the money yourself. gov.uk says that if you withdraw it without making a transfer, you will not be able to reinvest that part of your tax-free allowance again. HMRC says providers are not obliged to accept transfers in, and gov.uk says a provider may make you pay a charge. See how an ISA transfer works.

HMRC had planned to block transfers from a Stocks and Shares or Innovative Finance ISA into a Cash ISA for savers 64 or under from 6 April 2027. The Budget documents do not mention that block, and press reports say it is not going ahead as planned, so it is unconfirmed. Transfers from a Cash ISA into a non-cash ISA were never affected. With investments your capital is at risk. See ISA transfers.

Is a Cash ISA protected if the provider fails?

Yes, up to a limit. If a UK-authorised bank, building society or credit union fails, the FSCS says it will automatically compensate you up to £120,000 per eligible person, per bank, building society or credit union, for firms that failed after 30 November 2025.

The FSCS also says the limit is per banking licence. Brands that share a licence share one limit, and it applies to the total you hold across all your accounts under that licence, not to each account. See how FSCS protects ISA savings.

Cash ISA or savings account?

A Cash ISA keeps all your interest tax-free. A savings account outside an ISA pays no tax on interest while it stays within your allowances, but above them tax is due. gov.uk lists those allowances as your Personal Allowance, the starting rate for savings and your Personal Savings Allowance. The Personal Savings Allowance is £1,000 for a basic rate taxpayer, £500 for a higher rate taxpayer and £0 for an additional rate taxpayer.

Which pays more after tax depends on the rate and on your own tax position. See ISA or savings account and the ISA vs savings account calculator.

Questions people ask

Is a Cash ISA the same as a savings account?

A Cash ISA is a savings account with ISA tax treatment. The interest is tax-free, and what you pay in each year counts towards your ISA allowance. gov.uk says Cash ISAs can include savings in bank and building society accounts. A savings account outside an ISA is not limited by the ISA allowance, but interest above your allowances can be taxed.

Is the interest on a Cash ISA really tax-free?

Yes. gov.uk says you do not pay tax on interest on cash in an ISA, and that you do not need to declare ISA interest on a tax return. You keep your savings on a tax-free basis for as long as you keep the money in your ISA.

Can a 16 or 17 year old open a Cash ISA?

No. gov.uk says you must be 18 or over to open an ISA. Before 6 April 2024, 16 and 17 year olds could open a Cash ISA, and HMRC says the transitional arrangements for them ended at 11:59pm on 5 April 2026. Under 18s can have a Junior ISA, and gov.uk says 16 and 17 year olds can open their own.

Can you have more than one Cash ISA?

Yes. gov.uk's own example is £10,000 in one Cash ISA, £3,000 in another Cash ISA and £7,000 in a Stocks and Shares ISA in one tax year. Your total across all ISAs cannot go over £20,000, and your Cash ISA payments can use all of it. See how many ISAs you can have.

Is my money safe in a Cash ISA?

Deposits with a UK-authorised bank, building society or credit union are protected by the FSCS up to £120,000 per eligible person, per banking licence, for firms that failed after 30 November 2025. The limit covers the total you hold across all accounts under the same licence, not each account separately. See how FSCS protects ISA savings.

What happens to a Cash ISA at the end of the tax year?

Nothing. It stays open. gov.uk says your ISAs do not close when the tax year finishes. A new allowance starts on 6 April, and HMRC says an unused allowance cannot be carried forward to the next year.

Keep reading

ISA allowance and limit 2026/27: how the £20,000 splits The 2026/27 ISA allowance and limit is £20,000, shared across cash, Stocks and Shares, innovative finance and Lifetime ISAs. How it splits, and what changes.

How many ISAs can you have? Since 6 April 2024, you can pay into more than one ISA of the same type in a tax year. What actually limits you now, with examples and exceptions.

What is a flexible ISA? A flexible ISA lets you take cash out and pay it back in during the same tax year without losing allowance. How it works, and how to check yours.

How does an ISA transfer work? Move an ISA by asking your new provider to transfer it, not by withdrawing the cash. How transfers work, how long they take, and what changes in 2027.

Cash ISA limit: the £12,000 cut is cancelled The Budget on 28 October 2026 cancelled the £12,000 Cash ISA limit for under-65s. The limit stays £20,000 at every age. What was planned and what is next.

ISA or savings account: which is better? A taxable savings account can match a Cash ISA while your interest stays within your Personal Savings Allowance. Here is where that stops being true.