• Earn 1.00% AER (variable) on balances over £25,000 (0.50% AER (variable) on balances below £25,000)
• Transfers allowed in – bring all your cash ISAs together in one place
• Instant access – manage your account by phone, in-branch and online
• Tax free interest means interest payable is exempt from UK income tax

What is a cash ISA?

A cash Individual Savings Account (ISA) is a tax-free savings account which allows you to save up to a set amount of money per financial year without paying any tax on it. The cash ISA limit currently stands at £15,000 per person and you need to be a UK resident or Crown employee aged 16 or over to open an account. You can only have one cash ISA per tax year, but you can also have a different type of ISA, known as a stocks and shares ISA, simultaneously.

Benefits of a cash ISA

There are several key benefits to a cash ISA:

• No income tax — you don’t pay tax on any interest you earn from the cash in your ISA
• Easy access — if you choose an instant access cash ISA (rather than a fixed-rate cash ISA) it’s a convenient way to save at a good interest rate while retaining fast and easy access to your money, should you need it
• No need to declare — you don’t need to declare your cash ISA on your tax return
• Straightforward transfers — you can transfer your cash ISA to a different provider to get a better rate of interest.

How much tax can I save with a cash ISA?

The good news is that whatever your tax bracket, you’ll pay 0% tax on any savings held in a cash ISA. Compare this to the usual tax rates on savings:

• Saving rate taxpayers — you would usually pay 10% tax on interest earned from your savings. In a cash ISA this savings interest is tax-free
• Basic rate taxpayers — you would usually pay 20% tax on interest earned from savings. In a cash ISA this savings interest is tax-free
• Higher rate taxpayers — you would usually pay 40% tax on interest earned from savings. In a cash ISA this savings interest is tax-free
• Additional higher rate taxpayers — you would usually pay 50% tax on interest earned from savings. In a cash ISA this savings interest is tax-free.

Choosing the best cash ISA deal for you

There are several factors to consider when choosing a cash ISA:  

• Do you want easy access to your money? An instant access ISA might be the right choice for you, as long as you’re willing to accept a slightly lower rate of interest
• Are you happy to lock away cash for a set period of time? Fixed-rate cash ISAs might be a better option as they have the potential to offer a greater return long-term
• Do you have a lump sum to invest, or are you planning to make small regular payments? Different ISA providers offer different minimum deposits ranging from just one pound to several thousand pounds

There is no single ‘right’ cash ISA choice for everyone — it’s a case of weighing up the different factors and considering which product and provider best meets your overall needs.

Can I transfer my cash ISA to a new provider for a better deal?