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Top Cash ISAs 2015/16

1.55% easy access or 2.1% fixed

ISAs: They're a piece of cake

Happy New Tax Year. As the clock clicked past midnight on the morning of Monday 6 April, everyone over 16 in the UK got a brand new £15,240 allowance to put in a cash ISA, which is just a savings account where you donít pay tax on the interest.

The best rates pay up to 2.1% and the earlier you save the more you'll earn. Don't worry if you've opened one in previous tax years, you can open another with whichever provider you choose. And if the rate is poor on your old ISA you can transfer it across to the new one.

ISA Countdown

If you don't use it, you lose it.

Cash ISAs need-to-knows

  • The cash ISA is not dead

    You've probably heard about all the innovations to savings, the biggest of which being the personal savings allowance, which will mean that - from April 2016 - basic-rate taxpayers will be able to earn £1,000 in savings interest before paying any tax, and higher-rate payers £500.

    For most people that will be more than enough to ensure they don't pay any tax on their savings. Which, naturally, leads to the question: 'why do I need a cash ISA if I won't pay tax anyway?'

    The answer is that there are distinct advantages to saving in an ISA even if your normal savings are also tax free. Read Martin's full thoughts on why the cash ISA isn't dead, or click the question below for a quick summary.

    Why should I still save in an ISA if I wonít pay any tax on interest?

  • You can save up to £15,240 this year in a cash ISA

    You've probably heard of cash ISAs, they've now been around for more than 16 years. They were radically overhauled in 2014, with the amount you're able to save tax free rising from just under £6,000 to a massive £15,000.

    But, as the amount rises each year, you're now able to save £15,240 in an ISA, meaning you won't pay any tax on the interest you get.

  • Cash ISAs are NOT complicated

    Everyone in the UK over 16 has a £15,240 cash ISA allowance. The allowance can be used to max out your cash ISA or stocks & shares ISA - how you split the money is entirely up to you. Plus, from autumn, first-time buyers will be able to choose a Help to Buy ISA, giving them a bonus of up to £3,000 if they're saving towards a house.

    The slate's wiped clean at the beginning of every tax year on 6 April, so even if you opened up one just before the tax year ended on 5 April, you can do it all over again from today

    There are easy-access and fixed options, just like normal savings. It's that simple. But for some reason many over-complicate them.

    Don't be scared. Ideally, we wish we could hypnotise people so when they read "cash ISA", they actually see:

    It's a savings account you don't pay tax on.

    Know this and it all becomes clearer. Some people don't have a cash ISA because they believe they have to lock their money away. But it's just a savings account - you don't need to lock cash away if you choose an easy-access account.

    Still not sure? It's time for an analogy

    For years now - whether on TV, radio or in his book - Martin's used the same analogy to explain ISAs. If it ain't broke, don't fix it, so here come the cakes...

    A potential ISA scenario, how ISAs work and how you can increase your savings
    Quick questions

    What happens to the allowance if I haven't used it by the end of the tax year?

    Can I make withdrawals?

    How many ISAs can you have?

    Can I split between a fixed and easy access ISA?

    Is my money safe in an ISA?

  • Want a Help to Buy ISA? Don't open a normal cash ISA before autumn

    The Budget in March 2015 announced the creation of a first-time buyers' Help to Buy ISA, planned to launch in autumn.

    It's Help to Buy because the Government adds money to what you manage to save, to the tune of £50 for every £200 you contribute. We take you through it step-by-step in our Help to Buy ISA guide.

    However, you will need to choose between a cash ISA OR a Help to Buy ISA, as you can't have two cash ISAs open in the same tax year.

    So if you want a Help to Buy ISA, for safety don't open a 2015/16 cash ISA...though for the savvy, there are ways you can get around this...

    How can I open a Help to Buy ISA and cash ISA in the same year?

  • Unlike savings accounts (for now), earn £100 in ISA interest, keep £100

    The gain is simple. In a cash ISA, you keep the whole amount - that £100 in interest goes straight into your savings pot without even thinking about stopping for the taxman.

    This is unlike a normal savings account where, if you earn £100, you'll only receive £80 after basic-rate tax. After higher rate tax, it's £60.

    So, as long as rates are similar, ISAs win. This should spell it out:

    On £100 interest, higher rate taxpayers keep £60, basic rate taxpayers keep £80, but all taxpayers keep £100 in an ISA

    However, from April 2016, this won't necessarily be the case. All basic-rate taxpayers will get a tax-free savings allowance of £1,000 Ė thatís the amount they can earn in savings interest before paying any tax.

    However, this doesnít negate all the advantages of ISAs. There are many who will still benefit from saving in an ISA even if their tax status would be the same wherever they saved.

    Why should I still save in an ISA if I wonít pay any tax on interest?

  • Cash in an ISA stays tax-free YEAR AFTER YEAR

    Cash in an ISA stays tax-free as long as it's in there. The aim's to protect more of your money which is why we nag you about using the full ISA allowance if you can.

    If you miss a year now, you might regret it five years later. If you've big savings, you can gradually protect more and more of your cash. Those who started saving when ISAs were first introduced in 1999 could now be sitting on a good tax-free lump sum.

    Money in an ISA stays tax-free year after year - you could have £62,000 plus interest now
  • Check rates on old ISAs, as many are pitiful

    Savings providers like us to think once our money's in, it's a done deal. This is wrong. Many old ISAs now pay appallingly low rates - check yours now. If the rates don't come close to the current best buys, ditch and transfer.

    But you've a RIGHT TO TRANSFER to boost them. Consolidating new & old cash ISAs together into one new shiny ISA makes it much easier to transfer again in the future.

    Our ISA Transfers guide has full options. Don't withdraw the cash though, as it'd no longer be in an ISA. Tell the new provider to transfer it for you instead.

  • Earn 5% on your ISA money now

    ISA rates are higher than normal top savings rates, but they are beaten by high rates on some current accounts to persuade you to switch to them.

    As many current accounts only allow sub £3,000 worth of savings, it's worth saving in both a current account and a cash ISA if you've got more than that. Alternatively, you can earn 3% with Santander on the full £15,240.

    Of course the key is you donít pay tax on ISAs, so you have to compare it to the after tax rate. Here are the top picks - click the links below for full info on these accounts.

    • Santander 123 pays 3% on £3,000 - £20,000. Thatís 2.4% after basic-rate tax, and 1.8% after higher rate.
    • Club Lloyds pays 4% on £4,000 - £5,000. For basic-rate taxpayers that's 3.2% after tax, for higher-rate payers it's 2.4%.
    • TSB pays 5% on up to £2,000. That's 4% after tax for basic-rate taxpayers, 3% for higher rate.
    • Nationwide FlexDirect pays 5% on up to £2,500 for a year, 1% after that. That's 4% after tax for basic-rate taxpayers, 3% for higher rate.

    You also need to look at the bigger, long-term picture. Saving in an ISA guarantees tax-free status on that cash for as long as it's kept in an ISA. Interest on a current account is likely to be short-lived. Though in an ideal world, you'd have both. Try this:

    First, put cash in a high-interest bank account. As long as the after-tax rate beats your chosen ISA, do this now rather than using your ISA allowance. See Current Accounts for the full options.

    Then, use the cash to open an ISA in March 2016. A week before the tax year ends, move the cash out of the bank account to fill your ISA allowance. That way you get the short-term high rate from the banks, but you still get the tax-free benefit of your ISA allowance. See Martin's ISAs vs high-rate bank accounts blog from earlier in the year for full details.

Best buys Easy-access ISAs

Easy-access cash ISAs mean you can take out your money when you want it, without penalty. But, for the moment, once you've taken it out, you can't put it back in.

My building society or bank has a better rate than accounts here. Why isn't it featured?

However, there are fixed rates that offer some access so don't plump for an easy access unless you know you need to be able to withdraw the money within the first year.

West Brom logo

1.55% for new money and transfers

The West Bromwich BS 1.55% AER

The WebSaver Limited Access account from The West Bromwich BS pays the highest rate for new and old ISA money. But, you have limited access to your cash - you can only make three withdrawals a year - so if you're likely to need access to your cash more often you're better off transferring the ISA as your third withdrawal to one that allows unlimited withdrawals rather than losing the high rate.

1.55,1000
Need-to-knows
  • You need to open the account with minimum £1,000, but the balance can drop to £1 after.

  • You can withdraw three times per account year (which runs from 6 April 2015 to 5 April 2016). If you make anymore the rate drops to 0.75% for the rest of the year.

  • There's no bonus on the account, so monitor the rate and be prepared to ditch and transfer if the rate drops.

  • The account can only be opened and managed online.

  • The West Brom BS has the full £85,000 UK FSCS savings safety protection.

SUMMARY:

Rate: 1.55% AER variable | Min deposit: £1,000 | Access: Online | Interest paid: Annually | Allows previous ISA transfers: Yes

Post Office logo

1.5% but only on new money

Skipton BS 1.5% AER

The Bonus Cash ISA from Skipton BS also pays a top 1.5% rate, and is good for those who need regular access to their cash. But it doesn't allow you to transfer in old ISA money and you can only open and manage the account online.

1.5,1
Need-to-knows
  • The rate includes a 0.5% bonus for the 12 months. After, the rate will drop so you'll need to be ready to transfer out when it does.

  • It's only available online but if you prefer there's a similar branch/post version available.

  • You can withdraw from the account at any time without penalty.

  • Skipton Building Society has the full £85,000 UK savings protection. See more information about the Savings Safety rules.

SUMMARY:

Rate: 1.5% AER incl 0.5% bonus for 12mths | Min deposit: £1 | Access: Post or branch | Interest paid: Annually or monthly | Allows previous ISA transfers: No

NS&I

1.5% but only on new money

NS&I 1.5% AER

The NS&I Direct ISA pays a slightly lower rate than the ISAs above, but its a good alternative. There's no bonus, so monitor the rate and be prepared to ditch and transfer if it drops (though NS&I's rates rarely change). It's only available on new ISA cash, meaning you can't transfer in old ISAs. NS&I protects 100% of your cash, but this isn't such a big draw these days, as all UK-registered providers protect up to £85,000.

1.5,1
Need-to-knows
  • You can withdraw your cash at any time.

  • You can make unlimited deposits, provided you stay within the £15,240 ISA limit.

  • There's no bonus on the account, so monitor the rate and be prepared to ditch and transfer if it drops.

  • NS&I is the only savings provider fully backed by the UK Government, so it protects 100% of your cash. See more information about the Savings Safety rules.

SUMMARY:

Rate: 1.5% AER variable | Min deposit: £1 | Access: Online/phone | Interest paid: Annually on 5 April | Allows previous ISA transfers: No

WARNING! You can easily beat these rates Get up to 2.1% from easy access loophole

Itís really worth considering whether you really need easy access. Most people keep their cash in ISAs for the long term Ė if so, you can smash the rates above. Better still weíve got a clever loophole that enables you to earn more and still have some access to your cash.

Earn 2.1% fixed with access. Unlike with normal fixed savings, fixed cash ISAs canít lock your cash in, yet they can levy interest penalties for withdrawals.

The beauty with the Coventry BS ISA is you get a fixed rate for four years, but should you need access earlier you only lose 120 days' interest as a penalty. So if you donít need instant access to your cash, but think you might in the future, †this account wins. Keep the money in for a year and youíd earn 2.1%, withdraw after two years and youíd earn an average 1.73%. Although this doesnít beat a straight two-year fix, it gives you greater flexibility to access your cash.

The Newcastle Building Society Big Home Saver ISA - a regular ISA paying 2.02% which can pay this even if you need access. For more, see our Newcastle BS ISA loophole.


Best buys Linked accounts

Santander savings Logo

Top rate for Santander 123 customers

Santander 1.5% easy-access

If you hold or open Santander's 123 current account, you can then sign up to its easy-access Direct ISA Saver paying a clean 1.5% rate. Plus, you can transfer in existing ISAs too.

Need-to-knows
  • If you hold a 123 credit card, or are a Select customer (a bespoke service for wealthier customers, eligibility criteria applies), you can get the ISAs above even if you don't have the 123 current account.

  • You can make unlimited penalty-free withdrawals from the Direct ISA Saver.

  • After 12 months, the Direct ISA Saver will change into an ISA saver, and the rate'll drop depending on your balance. Check what your rate is and if it's poor, transfer out to a better payer.

  • Santander shares its £85,000 savings guarantee with Cahoot. See more information about the Savings Safety rules.
SUMMARY:

Rate: 1.5% AER variable easy access | Min deposit: £500 | Access: Online/branch/phone | Interest paid: Annually | Allows previous ISA transfers: Yes

Logo HSBC

Decent rates, but only available for HSBC bank account customers

HSBC up to 1.6% AER

Existing HSBC customers who have either its Bank, Premier or Advance accounts (or those who switch to them) can get its Loyalty Cash ISA, paying up to 1.6% AER. HSBC Premier holders - a top packaged account option for high-earners (£100k+) - get the top rate of 1.6%, while Advance customers earn 1.5%. If you hold any other HSBC current account, you'll get 1.4%.

Need-to-knows
  • Advance current account holders can get a £10/mth boost on top of the 1.5% interest rate. You either need to deposit £25 a month or a £300 lump sum into the ISA to be eligible - do this and you'll get £120 over the next 12 months.

  • The rate you get applies for 12 months following each deposit. To keep the rate, you must make a deposit at least every 12 months - if you don't, it drops to 0.5%, although your original rate returns when you make your next deposit.

  • HSBC shares its £85,000 savings guarantee with First Direct. See more information about the Savings Safety rules.
SUMMARY:

Rate: Up to 1.6% AER variable | Min deposit: £1 | Access: Online/branch/post/phone | Interest paid: Monthly | Allows previous ISA transfers: Yes

Best buys Notice cash ISAs

If you don't need instant access to your cash you can boost your rate slightly with a notice cash ISA. With these accounts you can have access to your cash should you need it, but you'll need to let them know in advance - often a couple of months notice.

There currently aren't any top-rate Notice ISAs. But we'll update here as soon as there are.

Best buys Regular saver ISAs

You can set up a standing order and save money in an easy-access ISA every month, but special regular saver ISAs often offer a slightly better rate for this.

But remember, the rate is calculated based on money being in the account for a full year. With regular savers, it takes a year to build up to the maximum.

Newcastle BS

2.02% top regular saver (and trick to save lump sums too)

Newcastle Building Society 2.02% regular ISA

The Newcastle Building Society Big Home Saver ISA is the highest paying regular saver account paying 2.02% AER variable. Yet you only earn that in a month if you a) deposit £1 to £1,270 in it and b) donít withdraw cash that month Ė otherwise itís 1% AER for that month.

Normally, to benefit from the high rate you can't save a large lump sum. Yet because it can be linked to Newcastleís other ISAs thereís actually a great trick to do both - earning you more interest than just sticking into an easy-access account each month.

How to use this account to save lump sums at a high rate


Need-to-knows
  • Miss a payment or withdraw cash and your interest is reduced to 1% AER variable for that month.

  • You can vary the amount you pay in each month between £1 and £1,270.

  • Newcastle BS offers up to £1,000 cashback if you save £5,000-£10,000, then take out a mortgage with it. But first check Mortgage Best Buys to compare its mortgages.

  • Newcastle BS has the full £85,000 UK protection. See more information about the Savings Safety rules.
SUMMARY:

Rate: 2.02% AER variable (incl. 1% bonus) | Min deposit: £1-£1,270 per month | Access: Online, post or branch | Interest paid: Monthly | Allows previous ISA transfers: No | Withdrawal restrictions: No, but lose interest bonus if withdrawal made

Nationwide BS

2% regular saver, good if you're looking for a flexible account as you can miss payments

Nationwide Building Society 2% regular ISA

If you're wanting to save regularly but don't know if you can commit to putting away cash every month, then the Nationwide Regular Saver ISA could be a good option for you. It pays the full interest whack even if you miss a monthly deposit or withdraw provided you have at least £1 in the account.

Or, if you only have a small lump sum to save, just put it in (or drip-feed it in if you have more than the monthly maximum saved), and use it as an easy-access account - the higher rate makes it worth it.

Need-to-knows.
  • The maximum you can pay in each month is £1,270.

  • If you haven't used your full £15,240 allowance by 1 March 2016, Nationwide will allow you to deposit any remaining allowance into this account from that date.

  • Nationwide BS is one of the providers that allow you to split your ISA allowance across its ISA products. See split ISA allowance for full details on how to do this.

  • Nationwide BS has the full £85,000 UK protection. See more information about the Savings Safety rules.
SUMMARY:

Rate: 2% AER variable | Min deposit: n/a | Access: Online or branch | Interest paid: Annually | Allows previous ISA transfers: No | Withdrawal restrictions: No

Best buys Fixed-rate cash ISAs allowing access

Fixed-rate savings are designed to lock money away for a set period. But by law, cash ISA providers MUST allow you access to your money, whenever you want it, though most will levy heavy penalties to do so.

However, one account allows access to your cash with a low penalty, so it's worth getting over instant access, even if you have no intention of keeping it for the full term. And if you don't need to withdraw, then you get the full benefit of the boosted rate for the entire length of the fix.

Clydesdale

Loophole allows you to get 2.1% on new ISA cash - with access

Coventry Building Society 2.1% AER

This loophole works to give you both a boosted rate, and access to your cash. Coventry Building Society pays 2.1% AER fixed until 31 May 2019. If you find you need access to your cash before then, you can close the account (including transfers to another account) for a 120-day interest penalty, roughly a third of the annual 2.1% rate, bringing it to 1.35% if you withdrew after a year.

2.25,1
Need-to-knows
  • If you close the account after two years, you'll get an average rate of 1.73%. And after three years gives an average of 1.85%.

  • You can deposit any amount from £1 up to the £15,240 ISA limit.

  • You must make your initial deposit within 14 calendar days of opening the account.

  • Coventry Building Society shares its £85,000 UK savings safety guarantee with Stroud & Swindon Building Society. See more information about the Savings Safety rules.

SUMMARY:

Rate: 2.1% AER | Min deposit: £1 | Access: Online/phone/branch | Interest paid: Annually on 31 May | Allows previous ISA transfers: No | CLOSURE penalty: 120 days' interest

How other top fixed-rate ISAs compare to the Coventry ISA:
Effective rate withdrawing after (2)
Provider Rate (AER) Fixed Term transfer allowed? Interest paid Penalty to withdraw 1yr 2yr 3yr 4yr 5yr
Top pick deals with low penalties
Coventrycoventry savings logo 2.1% (min £1) Until 31 May 2019 No Annually 120 days' interest (1) 1.35% 1.73% 1.85% 2.1% -
Other fixed ISAs (all allow transfers & early access/closure)
Aldermore
BankAldermore savings logo
1.65% (min £1,000) One year Yes Annually 120 days' interest 1.65% - - - -
Julian
HodgeJulian Hodge savings logo
1.9% (min £5,000) Two years Yes Annually 120 days' interest 1.27% 1.9% - - -
Santanderpost office savings logo
123 customers only
2% (min £500) Two years Yes Annually 120 days' interest (1) 1.34% 2% - - -
State Bank
of India*state-bank-of-india-savings-logo
2.3% (min £15,000) Three years Yes Annually loss of 1% interest 1.3% 1.3% 2.3% - -

If you've less to save you can earn the same rate by opening this State Bank of India ISA. The min deposit is £5,000.

State Bank
of India*state-bank-of-india-savings-logo
2.5% (min £15,000) Five years Yes Annually loss of 1% interest 1.5% 1.5% 1.5% 1.5% 2.5%

If you've less to save you can earn the same rate by opening this State Bank of India ISA. The min deposit is £5,000.

(1) Partial withdrawals not permitted - you must close the account. (2) The effective rate will be slightly less if you add more than one lump sum but the accounts will be in roughly the same order as keeping the same amount in there.

Best buys Ethical cash ISAs

Ethical savings accounts - where providers behave ethically in terms of the environment, human rights and more - have jumped in popularity. Our main focus always is telling you the top savings rates, but to match demand we've worked with Ethical Consumer to list the top-paying accounts that also rate highly on their ethics.

ethical consumer savings scale

Ethical easy access savings - earn up to 1.55%

ALL THE ACCOUNTS BELOW HAVE THE FULL £85,000 UK GUARANTEE

The West Bromwich BS 1.55% AER variable - allows transfers in

Ethical Rating 13/20

The WebSaver Limited Access ISA from The West Bromwich BS pays 1.55% for new and old ISA money. You need to open it online with minimum £1,000, but the balance can drop to £1 after, and you can only make three withdrawals a year. The West Brom BS has the full £85,000 UK savings protection. See more information about the Savings Safety rules.

Skipton BS 1.5% AER - no transfers allowed

Ethical Rating 13/20

The Bonus Cash ISA from Skipton BS also pays a top 1.5% rate, and is good for those who need regular access to their cash. But it doesn't allow you to transfer in old ISA money and you can only open and manage the account online. Skipton Building Society has the full £85,000 UK savings protection. See more information about the Savings Safety rules.

Ethical fixed savings - earn up to 2.1%

ALL THE ACCOUNTS BELOW HAVE THE FULL £85,000 UK GUARANTEE

Coventry BS 2.1% AER fixed for one to four years

Ethical Rating 13.5/20

The Coventry Building Society fixed-rate ISA pays 2.1% AER until 31 May 2019, but its low 120-day withdrawal penalty makes a decent bet even if you don't keep it for the full term. You can save from £1, but you can't transfer in old ISAs. Coventry BS shares its £85,000 FSCS protection with Stroud & Swindon Building Society.

Kent Reliance 1.85% AER fixed for two years - allows transfers in

Ethical Rating 13.5/20

The two-year fixed-rate cash ISA from Kent Reliance pays 1.85% AER from £1,000, plus you can transfer in previous years' ISAs. The account can be opened online, by post or in branch.

ISA Countdown

If you don't use it, you lose it.

Use the net to compare top rates

Fixed rate deals can change regularly. For a full list of fixed rate ISAs, use the MoneySupermarket* comparison (select cash ISAs and then bonds) or Moneyfacts. Though remember, they're just a simple list of top rates, so ensure you check for the possible pitfalls noted in this article.

The ISA savings calculator

When using the calculator below, use the AER (annual equivalent rate) for increased accuracy. It should be listed on your statement. Obviously as most accounts' interest rates are variable, the answers will change if the rate does, so only use the calculator to get a rough indication of your likely outcome.

How much do you need to save? £
How much do you already have? £
How much can you save a month? £
Whatís the interest rate? %
How much do you need to save? £
How much do you already have? £
Whatís the interest rate? %
When do you need it by? years and months time.
How much do you already have? £
How much can you save a month? £
Whatís the interest rate? %
How far ahead do you want to look? years and months time.

Click here to use the ISA savings calculator

The calculator assumes you put money in at the beginning of each month, so if this isn't how you do it, the answers will be ever-so-slightly out. If you don't make regular deposits but put in lump sums, figure out the monthly equivalent for a rough answer. Feel free to play with the results to see how your savings are affected.

ISA FAQs

Here's a list of the most common queries. If you've got a question we've not answered below, in the text above or in Martin's ISA video below, suggest a question in the forum.

Moving your ISA

  • Iíve got several ISAs from previous years Ė can I put them all into one?

  • If I open and pay into an ISA in the current tax year, then the rate drops, can I move it?

  • Can I transfer my ISA to someone else?


  • Using and accessing your ISA

  • Can I open a joint ISA with my partner?

  • What happens to money in a cash ISA if the person has passed away?

  • Will I get any interest if I haven't had money in the account for a full year?

  • If I take money out of my ISA, do I then pay tax on it at my usual rate?

  • Should I use my ISA allowance for cash or stocks & shares?


  • Alternatives to ISAs

  • Is it even worth saving in an ISA as rates are so low?

  • Should I offset my mortgage instead of putting cash into an ISA?

  • Should non-taxpayers bother with ISAs when it makes no difference?

  • If £1,000 or £500 in interest will be tax free in savings anyway, is there any point in an ISA?

  • Cash ISAs vs premium bonds - what's best?