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Top Cash ISAs 2016/17

1.05% easy access or 1.75% fixed

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Martin

Updated Daily

ISAs: They're a piece of cake

Now everyone who's aged 16 and over can put a new £15,240 into a cash ISA – a savings account where you never pay tax on the interest.

The best rates pay up to 1.6% 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 to the new one.

ISA Countdown

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

Cash ISAs need-to-knows

  • Cash ISAs are just savings accounts you NEVER pay tax on

    Everyone in the UK who's 16 or over gets an ISA allowance at the start of each tax year. For 2016/17 it's £15,240 – if you put money in it then it isn't eligible to be taxed, and this stays the same year after year.

    It really isn't any more complex than that. Just like normal savings, cash ISAs come in different flavours – there's easy access (where you can withdraw money whenever you want), fixed rate (where you get a guaranteed rate, but are supposed to lock cash in for a set time) and a variety of other types.

    So don't be scared, when you read cash ISA just see "a savings account you never pay tax on".

    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?

  • These days, though, all savings are paid tax-free, so is a cash ISA worth it?

    On 6 April 2016 the new personal savings allowance (PSA) launched. It means all savings are now automatically paid tax-free. Basic 20% rate taxpayers can earn up to £1,000 interest a year without needing to pay tax on it, higher 40% rate taxpayers £500 (top 45% taxpayers will always pay tax on savings)

    For most people that will be enough to make all their savings tax-free, and therefore the question is simply "what pays the highest rate?"

    The answer to that isn't cash ISAs. So for most people with under around £20,000 of total savings, cash ISAs won't be a winner. For example the Santander 123 account pays 1.5% on up to £20,000, more than the top easy-access ISA.

    In fact all ISAs are easily beaten for most people by both top bank account savings, where you get a high rate as part of your current account, and regular savings accounts.

    So when is a cash ISA worth it?

    The most important thing to note is that cash ISA interest doesn't count towards your PSA, so you can earn it tax-free, and still have your full £1,000 (or £500) PSA allowance. Therefore for top-rate taxpayers or bigger savers who've used up the PSA, there are big tax advantages of saving in a cash ISA.

    - Basic-rate taxpayers over the PSA limit. For every £100 interest you earn in normal savings you only get £80, whereas in an ISA you get the whole £100. Therefore the normal savings rate would have to be 25% higher for it to beat a cash ISA.

    - Higher-rate taxpayers over the PSA limit. For every £100 interest you earn in normal savings you only get £60, whereas in an ISA you get the whole £100. Therefore the normal savings rate would have to be 66% higher for it to beat a cash ISA.

    - Top-rate taxpayers. For every £100 interest you earn in normal savings you only get £55, whereas in an ISA you get the whole £100. Therefore the normal savings rate would have to be 82% higher for it to beat a cash ISA.

    So cash ISAs can be winners even with lower rates. Also it's worth remembering that while £1,000-a-year interest seems a lot now with our current pitiful interest rates, if interest rates rise then more people will need to pay tax. So saving into an ISA now could protect you from future tax.

    For more on this, read the full Why the cash ISA isn't dead guide.

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

    You probably know 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. This year though we haven't seen a jump: the 2016/17 limit is the same as it was in 2015/16.

    However, from April 2017, due to the launch of the new Lifetime ISA, the limit will increase to £20,000.

  • Cash ISAs can now be flexible – letting you replace withdrawn cash

    This tax year, for the first time, flexible cash ISAs have been introduced. This means you can replace cash withdrawn from an ISA earlier in the same tax year without it using up your year's ISA limit.

    However, it is up to different ISA providers to decide whether they will let you do this. We note in our best buys below whether or not the ISAs are flexible.

    For full info on the new flexibility, see Flexible ISAs.

  • If you're a wannabe first-time buyer, a Help to Buy ISA – not a cash ISA – is a no-brainer

    The first-time buyers' Help to Buy ISA launched on 1 December 2015 and it means that if you use the money towards buying a first home you get an extra 25% added on top, up to a maximum of £3,000. 

    Yet the rules say you can't contribute to a Help to Buy ISA and a cash ISA in the same tax year. So if you had to choose, even though you can put less in Help to Buy, the huge bonus means it's worth it. Luckily though there are a few providers who get round the 'you can't have both' rule; full info on this in our Top Help to Buy ISAs guide. 

  • 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.

    You've a RIGHT TO TRANSFER to boost them. Consolidating new and old cash ISAs together into one new shiny ISA makes it much easier to transfer again in 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.

Best buys Easy-access ISAs

Easy-access cash ISAs mean you can take out your money when you want, without penalty.

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.

Paragon Bank

Top rate with unlimited withdrawals and you can open with £1

Coventry BS 1.05% AER

The Easy Access cash ISA from Coventry BS pays the top easy-access ISA rate and you can open it with just £1. You can also make withdrawals from the account so is a good option if you'll need to access your cash.

1.05,1
Need-to-knows
  • This ISA is flexible so any money you take out of it and replace will not count towards your annual ISA allowance. For more on flexible ISAs see our need-to-know.

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

  • You can make unlimited penalty-free withdrawals from the account.

  • There's no bonus on the account so you need to watch in case the rate drops. If it does, transfer out to a better-paying ISA.
  • Coventry BS has the full £85,000 UK savings safety guarantee.

SUMMARY:

Rate: 1.05% AER variable | Min deposit: £1 | Access: Online/phone/branch/post | Interest paid: Annually | Allows previous ISA transfers: Yes | Flexible: Yes

AA logo

Good rate with unlimited withdrawals, though the rate is dropping soon

NS&I 1% AER

The Direct ISA from NS&I pays a good easy-access rate and allows unlimited withdrawals. It's from the government's savings provider NS&I, so all cash you put in this account up to the ISA limit is protected by the Treasury.

The interest rate's dropping to 0.75% AER on 1 May so either consider this account for the short-term or be prepared to transfer to a higher paying provider when the rate drops.

1.0,1
Need-to-knows
  • The interest rate is dropping to 0.75% AER on 1 May 2017.

  • This ISA is not flexible so any money you take out of it and replace will count again towards your annual ISA allowance. For more on flexible ISAs see our need-to-know.

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

  • You can make unlimited penalty-free withdrawals from the account.
  • 100% of your money saved with NS&I is secured by the Treasury.

     

SUMMARY:

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

Post Office logo

Decent rate with a bonus that acts as a minimum rate guarantee

Post Office 0.9% AER

The Post Office Online ISA has a decent easy-access rate that includes a 12 month bonus of 0.65%. In this low interest environment, the bonus acts as a minimum rate guarantee though after 12 months the rate will plummet – diarise to switch then if it can be beaten.

You can make unlimited withdrawals over £10 with this account so is a good option if you'll need access to your cash.

0.9,100
Need-to-knows
  • This ISA is not flexible so any money you take out of it and replace will count again towards your annual ISA allowance. For more on flexible ISAs see our need-to-know.

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

  • You can make unlimited penalty-free withdrawals of £10 or more from the account.
  • The rate includes a fixed 0.65% bonus for 12 months.

  • The Post Office shares its £85,000 UK savings safety guarantee with Bank of Ireland UK and AA Savings.
SUMMARY:

Rate: 0.9% AER variable (inc. 0.65% bonus for 12 mths) | Min deposit: £100 | Access: Online only | Interest paid: Annually | Allows previous ISA transfers: Yes | Flexible: No

Best buys Linked accounts

Some banks reserve decent rates for their own customers. So, these aren't open to all. However, if you find an ISA deal that's really, really good, they're often open to switchers. See Best Bank Accounts to find how these banks' ISA rates.

There currently aren't any top-rate linked account ISAs that beat the best buys above. But we'll update here as soon as there are.

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, all except your first payment is only in for part of the year, so the interest may be less than you expect.

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

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. At the moment, there aren't any two-year ISAs that beat the one-year ISA below, or any four- or five-year ISAs that beat the three year ISA listed.

For a slightly larger choice of accounts, please see Fixed ISA Transfers.

Top fixed-rate ISAs:
Effective rate withdrawing after (1)
Provider Rate (AER) Fixed Term Transfer allowed? Interest paid Penalty to withdraw 1yr 2yr 3yr 4yr 5yr
Top fixed ISAs (all allow early access/closure)
Bank of Cyprus UK*
Tesco Bank
1.1% (min £500) One year Yes Annually 180 days' interest 1.1% - - - -
Principality BS
Leeds
1.26% (min £500) Two years Yes Annually or monthly 180 days' interest 0.64% 1.26% - - -
Paragon Bank
Paragon Bank
1.4% (min £500) Three years Yes Annually or monthly 270 days' interest 0.36% 0.88% 1.4% - -
Hodge BankHodge Bank logo 1.4% (min £5,000) Four years Yes Annually or monthly 180 days' interest 0.71% 1.05% 1.17% 1.4% -
Paragon BankParagon Bank 1.75% (min £500) Five years Yes Annually or monthly 365 days' interest 0% 0.86% 1.17% 1.31% 1.65%
(1) 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 0.9%

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

Coventry BS 0.9% AER – allows previous transfers

Ethical Rating 13.5/20

The cash ISA from Coventry BS pays an OK 0.9% rate, and is good for those who need regular access to their cash. You can also transfer in from other ISAs. You can open and manage the account online, by post, in branch and on the phone. Coventry Building Society has the full £85,000 savings guarantee. See more information about the Savings Safety rules.

Ethical fixed savings – earn up to 1.55%

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

Principality BS 1.55% AER fixed for five years

Ethical Rating 13.5/20

The Principality Building Society fixed-rate ISA pays 1.55% AER and is fixed for five years. It can be opened online, in branch or by post. You can open it with £500, and can transfer in previous years' ISAs.

Leeds BS 1.15% AER fixed for two years – allows transfers in

Ethical Rating 13.5/20

The two-year fixed-rate cash ISA from Leeds BS pays 1.15% AER from £100, 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.

The Cash ISA Calculator Pick your question

&

Please enter a valid current balance.

Please enter a valid monthly deposit.

Please enter a valid interest rate.

Please enter a valid number of years.

Your result

After saving {{ps.result.originalMonthlyDeposit | currency:'£':(ps.result.originalMonthlyDeposit % 1 > 0 ? 2 : 0)}} a month for {{ps.result.originalYears || 0 | addYearsLabel}} and {{ps.result.originalMonths| addMonthsLabel}},
you will have {{ps.result.totalSavings | currency:'£':(ps.result.totalSavings % 1 > 0 ? 2 : 0)}} in savings.

As you'll be saving more than {{ps.isaLimit | currency:'£':(ps.isaLimit % 1 > 0 ? 2 : 0)}} per year, we are assuming other family members will be using their ISA allowances to help you achieve this!

Please enter a valid target.

Please enter a valid current balance.

Please enter a valid monthly deposit.

Please enter a valid interest rate.

Your result

To save up {{tts.result.originalTarget | currency:'£':(tts.result.originalTarget % 1 > 0 ? 2 : 0)}}, by saving {{tts.result.originalMonthlyDeposit | currency:'£':(tts.result.originalMonthlyDeposit % 1 > 0 ? 2 : 0)}} a month,
it will take you {{tts.result.timeToSave | addYearsMonthsLabel}}.

As you'll be saving more than {{tts.isaLimit | currency:'£':(tts.isaLimit % 1 > 0 ? 2 : 0)}} per year, we are assuming other family members will be using their ISA allowances to help you achieve this!

Well done, you already have {{tts.result.originalTarget | currency:'£':(tts.result.originalTarget % 1 > 0 ? 2 : 0)}} in savings.

&

Please enter a valid target.

Please enter a valid current balance.

Please enter a valid interest rate.

Please enter a valid number of years.

Your result

To have {{cmd.result.originalTarget | currency:'£':(cmd.result.originalTarget % 1 > 0 ? 2 : 0)}} in savings after {{cmd.result.originalYears || 0 | addYearsLabel}} and {{cmd.result.originalMonths| addMonthsLabel}},
you should save {{cmd.result.monthlyCalculation | currency:'£':(cmd.result.monthlyCalculation % 1 > 0 ? 2 : 0)}} a month.

As you'll be saving more than {{cmd.isaLimit | currency:'£':(cmd.isaLimit % 1 > 0 ? 2 : 0)}} per year, we are assuming other family members will be using their ISA allowances to help you achieve this!

Well done, you already have {{cmd.result.originalTarget | currency:'£':(cmd.result.originalTarget % 1 > 0 ? 2 : 0)}} in savings.

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.

Want to complain about your savings provider?

If your savings provider has given you the incorrect interest rate, or you haven't received your interest at all, then you don't have to suffer in silence. It's always worth trying to call your provider first to see if it can help, but if not...

Resolver Info Box

This tool helps you draft your complaint and manage it too. It's totally free, and offered by a firm called Resolver, which we like so much we work with it to help people get complaints justice.

If the complaint isn't resolved, you can use Resolver to escalate it to the free Financial Ombudsman Service.

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

  • I've got several ISAs from previous years – can I put them all into one?

  • If I open and pay in to 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 are tax-free in savings anyway, is there any point in an ISA?

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

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