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Top Cash ISAs 2016/17

1.4% easy access or 2.2% fixed

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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 2.2% 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 3% on £3,000 to £20,000, more than double 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. 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.

ISA Coventry Logo

Current top pick and allows unlimited withdrawals

Coventry BS 1.4% AER

The Easy Access ISA from Coventry BS pays the highest easy access ISA rate, and allows unlimited withdrawals so is a good option if you'll need access to your cash.

1.4,1
Need-to-knows
  • This ISA is now flexible so you can take money out of it and replace it without it counting towards your ISA limit. For more 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.

  • Transfers of previous years' ISA cash are not allowed, though you can transfer ISA cash from the current tax year.

  • Coventry BS shares its £75,000 UK savings safety guarantee with Stroud & Swindon Building Society.

SUMMARY:

Rate: 1.4% AER variable | Min deposit: £1 | Access: Online/phone/post | Interest paid: Annually | Allows previous ISA transfers: No | Flexible: Yes

ISA Yorkshire BS Logo

Decent rate and allows ISA transfers

Yorkshire BS 1.35% AER

The Triple Access Saver ISA account from Yorkshire BS pays a decent rate, and allows you to transfer in previous years' ISA cash. However, you can only make withdrawals on three days each year to so if you'll need access to your cash look for another account.

1.35,100
Need-to-knows
  • This ISA is not currently flexible but Yorkshire BS has told us that they plan to launch flexible ISAs in summer 2016. 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 withdrawals from the account on three days per account year.

  • Chelsea Building Society and Barnsley Building Society also offer the same ISA, as they're part of the same banking group.

  • Yorkshire BS shares its £75,000 UK saving safety guarantee with Barnsley BS, Chelsea BS, Norwich & Peterborough BS and Egg. See more information about the Savings Safety rules.

SUMMARY:

Rate: 1.35% AER variable | Min deposit: £100 | Access: Post/branch | Interest paid: Annually or monthly | Allows previous ISA transfers: Yes | Flexible: No

Virgin Money logo

Next best payer and you can open it with just £1

Virgin Money 1.31% AER

The Defined Access E-ISA account from Virgin Money has a decent easy-access rate and you only need £1 to open it. However it only allows three penalty-free withdrawals per year. Make more than this and it gives you a lower interest rate, so if you think you'll need regular access to your cash, perhaps consider an ISA offering unlimited withdrawals.

1.31,1
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 get three penalty-free withdrawals a year; any more & the rate drops to 0.75%.

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

  • 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.

  • Virgin Money has the full £75,000 UK savings safety guarantee.
SUMMARY:

Rate: 1.31% AER variable | Min deposit: £1 | Access: Online only | Interest paid: Annually or monthly | Allows previous ISA transfers: Yes | Flexible: No

There's one account that beats the ones above on rate, though you need to go in to one of the bank's seven branches to open it. If you're close by, it could be a winner.

Punjab National logo

Top rate for easy access, but you need to go into a branch

Punjab National Bank 1.45% AER

If you live or happen to be near one of Punjab National Bank's seven branches, you can beat the open-to-all easy-access ISA rates above. Its cash ISA pays a market-leading 1.45% and allows you to have access to your cash whenever you want.

1.45,1
Need-to-knows
  • You can make unlimited penalty-free withdrawals from the account.

  • You can only open the account in a branch. Afterwards you can view your balance online, but any cash withdrawals must be made by post.

  • Punjab National Bank has the full £75,000 UK saving safety guarantee. See more information about the Savings Safety rules.

SUMMARY:

Rate: 1.45% AER variable | Min deposit: £1 | Access: Open in branch, withdraw by post | Interest paid: Annually | Allows previous ISA transfers: Yes

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' accounts rate.

Nationwide savings Logo

Good rate for Nationwide current account customers

Nationwide 1.3% AER easy-access

If you hold a Nationwide current account, you can get its easy-access Flexclusive ISA, which pays a decent rate, and allows you to transfer in old ISA cash.

Need-to-knows
  • This ISA is now flexible so you can take money out of it and replace it without it counting towards your ISA limit. For more see our need-to-know.

  • If you hold a FlexAccount or a FlexOne account you must have paid in £750/mth for the last three months or completed a switch in last four months to be eligible.

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

  • The rate is variable and can drop at any time. Keep an eye on the account, and if the rate drops, transfer out to a better payer.

  • Nationwide has the full £75,000 savings guarantee. See more information about the Savings Safety rules.
SUMMARY:

Rate: 1.3% AER variable | Min deposit: £1 | Access: Online/branch | Interest paid: Annually | Allows previous ISA transfers: Yes | Flexible: 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.

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.

Top fixed-rate ISAs:
Effective rate withdrawing after (2)
Provider Rate (AER) Fixed Term transfer allowed? Interest paid Penalty to withdraw 1yr 2yr 3yr 4yr 5yr
Top fixed ISAs (all allow transfers & early access/closure)
M&S Bank
M&S Bank logo
1.4% (min £500) One year Yes Annually £50 (1) 1.4% - - - -
Coventry BS
Coventry BS logo
1.5% (min £1) Until 31 May 2018 Yes Annually 120 days' interest 1% 1.5% - - -
United Bank UK United Bank UK Logo 1.72% (min £2,000) Three years Yes Annually 270 days' interest 0.45% 1.08% 1.72% - -
United Bank UKUnited Bank logo 2.2% (min £2,000) Five years Yes Annually 365 days' interest 0% 1.1% 1.47% 1.65% 2.2%
(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 1.4%

ALL THE ACCOUNTS BELOW HAVE THE FULL £75,000 UK GUARANTEE

Coventry BS 1.4% AER – though no transfers

Ethical Rating 13.5/20

The cash ISA from Coventry BS pays a decent 1.4% rate, and is good for those who need regular access to their cash – though you can't transfer in from other ISAs. You can open and manage the account online, by post, in branch and on the phone. Coventry Building Society shares its £75,000 UK savings safety guarantee with Stroud & Swindon Building Society. See more information about the Savings Safety rules.

Ethical fixed savings – earn up to 1.8%

ALL THE ACCOUNTS BELOW HAVE THE FULL £75,000 UK GUARANTEE

Leeds BS 1.8% AER fixed for five years

Ethical Rating 13.5/20

The Leeds Building Society fixed-rate ISA pays 1.8% AER and is fixed for five years. It can be opened online, by post or in branch. You can open it with £100, and can transfer in previous years' ISAs.

Kent Reliance 1.5% AER fixed for two years – allows transfers in

Ethical Rating 13.5/20

The two-year fixed-rate cash ISA from Kent Reliance pays 1.5% 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.

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?