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Top Cash ISAs 2017/18

1.11% easy access or 2.2% fixed

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Martin

Updated 16 Oct 2017

ISAs: They're a piece of cake

Now everyone who's aged 16 and over can put a new £20,000 in to 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 2017/18 it's £20,000 – 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 (or regular saver 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 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.

  • You can save up to £20,000 this year in a cash ISA

    You probably know of cash ISAs; they've now been around for more than 17 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, due to the launch of the new Lifetime ISA, the limit has increased further to £20,000.

  • Cash ISAs can be flexible – letting you replace withdrawn cash

    Some cash ISAs are flexible meaning you can replace cash withdrawn from them in the same tax year without it using up your year's ISA limit.

    In practice, this means that if you had £1,000 in a flexible cash ISA you could withdraw £500 and replenish it later in the tax year without affecting your ISA limit.

    If an ISA's non-flexible, any withdrawals do count towards your annual ISA limit. A £500 withdrawal from a non-flexible ISA would reduce your annual ISA limit even if you later deposited £500 back into the account.

  • However, it is up to different ISA providers to decide whether their accounts are flexible. We note in our best buys below whether or not the ISAs are flexible.

    For full info on the flexibility, see Flexible ISAs.

  • If you're a wannabe first-time buyer, consider a Help to Buy ISA or Lifetime ISA – not a cash ISA

    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. 

    Alternatively, the new Lifetime ISA (LISA), which launched on 6 April 2017, also offers a 25% state bonus and can be used towards buying a first home or for retirement – though you can only open one if you're aged between 18 and 39.

    You can save a maximum of £4,000 a year into a LISA and use the bonus to buy property worth up to £450,000, and unlike a Help to Buy ISA can open both a LISA and a cash ISA in the same tax year. However, access your money for anything other than purchasing a first home or for retirement aged 60+ and you'll pay a 25% withdrawal penalty (after the first year of the scheme). Full info in our Lifetime ISA 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.

Leeds BS

Joint-top rate if you've £1,000+, though it's only available for a year

Leeds BS 1.11% AER

The Limited Issue Online Access ISA from Leeds BS pays the joint-highest easy-access rate as long as you've £1,000 in the account. If your balance drops below this you'll receive just 0.05% interest.

The account is a bit of an odd one as interest is calculated daily but is only paid at maturity on 31 Jan 2019 - so bear this in mind.

1.11,1000
Need-to-knows
  • The account matures on 31 Jan 2019 and the balance will be transferred to a Cash ISA maturity account the following day, likely to pay a lower rate of interest.

  • You can make unlimited penalty-free withdrawals from the account, though if your balance falls below £1,000 you'll get just 0.05% interest.

  • You must open and manage the account online.
  • You can make unlimited deposits, provided you stay within the £20,000 ISA limit.

  • 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.

  • 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.
  • Leeds BS has the full £85,000 UK savings safety guarantee.
SUMMARY:

Rate: 1.11% AER variable | Min deposit: £1,000 | Access: Online | Interest paid: At maturity (31 Jan 2019) | Allows previous ISA transfers: Yes | Flexible: No

Virgin Money logo

Joint-highest rate and you can open with £1, though limited withdrawals

Virgin Money 1.11% AER

The Defined Access E-ISA account from Virgin Money pays the joint-highest easy-access ISA rate and you can open it with £1.

However, we've ranked this account below the Leeds BS account above as it only allows three penalty-free withdrawals per year. Make more than this and you get a lower interest rate, so only consider this account if you won't need regular access to your cash.

1.11,1
Need-to-knows
  • You get three penalty-free withdrawals a year; any more and the rate drops to 0.25%.

  • You can make unlimited deposits, provided you stay within the £20,000 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.

  • 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.

  • Virgin Money has the full £85,000 UK savings safety guarantee.
SUMMARY:

Rate: 1.11% AER variable | Min deposit: £1 | Access: Online | Interest paid: Annually or monthly | Allows previous ISA transfers: Yes | Flexible: No

Post Office money logo

Good rate and you can save from £100

Post Office Money* 1.07% AER

The Post Office* easy access ISA pays a good easy-access rate, allows unlimited withdrawals and you can save from £100.

However, unlike some other accounts in this guide, the rate includes a 0.82% bonus for 12 months. So diarise to transfer out to a better-paying ISA after a year.

1.07,100
Need-to-knows
  • You can make unlimited deposits, provided you stay within the £20,000 ISA limit.

  • You can make unlimited penalty-free withdrawals from the account.
  • The rate includes a bonus of 0.82% for 12 months.

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

Rate: 1.07% AER variable (incl 0.82% bonus for 12mths) | Min deposit: £100 | Access: Online | Interest paid: Annually | Allows previous ISA transfers: Yes | Flexible: 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.

At the moment, one account - The Yorkshire Bank ISA which matures on 29 Jan 2021 - allows access to your cash with a low penalty, so it's worth getting over some shorter fixed accounts, 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.

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
Top fixed ISAs (all allow early access/closure)
Virgin Money*
Virgin Money
1.35% (min £1) Until 24 Oct 2018 Yes Annually or monthly 60 days' interest 1.35% - - -
Charter Savings
Charter Savings
1.65% (min £1,000) Two years Yes Annually or monthly 180 days' interest 0.84% 1.65% - -
Charter Savings
Virgin Money
1.7% (min £1,000) Three years Yes Annually or monthly 210 days' interest 0.72% 1.21% 1.7% -
Yorkshire Bank
Yorkshire Bank
2.2% (min £2,000) Until 29 Jan 2021 Yes Annually Dependent on days to maturity (2) 1.12% 1.66% 2.02% 2.2%
(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. (2) Yorkshire Bank penalty to withdraw is dependent on days to maturity. 1-91 days to maturity (45 days' interest penalty), 92-181 days (90 days'), 182-273 (135 days'), Above 273 (180 days').

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 1.05%

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

Coventry BS 1.05% AER – allows withdrawals

Ethical Rating 13.5/20

The Easy Access ISA from Coventry BS pays 1.05% and is good for those who need regular access to their cash. You can open and manage the account online, by post, phone or in branch and you can save from £1. Coventry Building Society has the full £85,000 savings guarantee. See more information about the Savings Safety rules.

Ethical fixed savings – earn up to 1.8%

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

Leeds BS 1.8% AER fixed for five years

Ethical Rating 13.5/20

The Leeds BS fixed-rate ISA pays 1.8% AER and is fixed for five years until 30 Nov 2022. It can be opened online, in branch or by post. You can open it with £100 and can transfer in previous years' ISAs.

Leeds BS 1.5% AER fixed for two years – allows transfers in

Ethical Rating 13.5/20

The two-year fixed-rate cash ISA from Leeds BS pays 1.5% 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.

How to compare the top Cash ISA 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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