Top Cash ISAs 2021/22
0.6% easy access or up to 1.51% fixed
A cash ISA is a savings account where you'll never pay tax on the interest – and this tax year, if you're 16+, you can put up to £20,000 into one. While the top rates have tumbled in recent months, if you do need an ISA's tax benefits, this guide has the top picks.
What is a cash ISA?
Cash ISAs are just savings accounts you NEVER pay tax on. Everyone in the UK aged 16 or over gets an ISA allowance at the start of each tax year – for 2021/22, which ends on 5 April next year, it's £20,000.
Just like normal savings, cash ISAs come in different flavours – there's easy access (withdraw 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.
Eight cash ISA need-to-knows
To help you work out if opening a cash ISA is right for you, it's worth getting your head around the following need-to-knows...
On 6 April 2016 the personal savings allowance (PSA) was launched, which means all savings interest is 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 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?"
Currently, the answer to that is normal savings, especially when it comes to fixes. So before you opt for an ISA, check if you really need one – unless you're a top-rate taxpayer or have very large savings, you can get better returns with top normal savings.
So when should you open a cash ISA?
For top-rate taxpayers or bigger savers who have used up their 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.
To work out what rate a normal fixed savings account would have to pay to beat an ISA, take the ISA rate and multiply it by 1.25 (if you're a basic-rate taxpayer), 1.66 (higher-rate taxpayer) or 1.82 (top-rate taxpayer).
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 rose then more people would need to pay tax. So saving in an ISA now could protect you from future tax.
2. You can transfer your ISA to another provider to boost the rate – but it's vital you do it the right way
Many old ISAs now pay appalling rates, so check yours now. If they don't come close to the current top picks, you can transfer to boost them, but you must do it correctly. Consolidating new and old cash ISAs into one new shiny ISA makes it much easier to transfer again in future. You can also transfer an ISA without paying any new money in.
We note in all our top picks below whether an ISA allows transfers into it.
How to transfer an ISA
Transferring an old ISA is a technical process – it's not just like switching a normal savings account. Yet as long as you abide by the golden ISA transfers rule, it should go smoothly.
If you want to transfer, never withdraw money from a cash ISA! You'll immediately lose all the lasting tax benefits.
Instead, speak to the new provider and fill in an ISA transfer form. Your new provider should then sort it all out, including moving the money over for you – keeping your ISA cash permanently tax-free.
The banks have agreed to a guideline of 15 working days for the transfer to take place, so you should begin to receive interest within this time. If it goes much over 15 working days, it's worth complaining to the ISA provider to see if it can speed it up, or at least compensate you if the delay means you lose a decent chunk of interest.
Can I transfer more than one old ISA into a new one?
Consolidating all your old ISAs into one is allowed, and often a good way of upping the rate on your whole wodge of ISA cash, because providers regularly slice rates on the money you've saved in previous years.
To do this, just tell the new provider you want to transfer in from multiple old ISAs. However, watch that it doesn't push your combined savings with one financial institution over £85,000, as then you'd no longer be within the UK's savings safety limit (read Are your savings safe?).
Is there any reason not to transfer?
You may be charged a penalty by your current provider for transferring out. This is not common these days (except on fixed ISAs if you leave during the term), but always check, especially if your accounts are old.
A small penalty such as 30 days' lost interest isn't such a big issue, but a higher fee essentially locks you in, as the gain from switching is gazumped by the transfer charge. If your ISA has a penalty for leaving, work out whether you'll be better off by switching to the better interest rate.
Can I transfer my ISA to somebody else?
No, unfortunately not. You can withdraw the cash and give it to someone else but once money is taken out of an ISA, it loses its tax-free status – unless interest is then covered by your (or their) personal savings allowance. You also can't open a joint ISA with somebody else – ISA stands for 'individual savings account'. You get one ISA allowance each and that's it.
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.
A £500 withdrawal from a non-flexible ISA would reduce your annual ISA limit even if you later deposited £500 back into the account.
We note in our top picks below whether or not the ISAs are flexible – for full info on the flexibility, see Flexible ISAs.
The Lifetime ISA (LISA) launched on 6 April 2017 and offers a 25% state bonus on your savings, if you use them towards buying a first home or for retirement. 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. 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. You can open a LISA and a cash ISA in the same tax year. Full info is in our Lifetime ISA guide.
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.
Each tax year (6 April until the next 5 April), everyone aged 16 or over gets a new ISA allowance. But if you don't use it, you lose it.
Once that year's closed, you can't put another penny in that specific ISA allowance. So if you put aside nothing in the 2020/21 tax year, when the maximum was £20,000, that's it – it's gone. Or if you put £2,000 in during 2020/21, you can't now top it up as that tax year is closed.
If you do deposit the cash in time, you can keep it in there, tax-free, for as long as you like. Then, as soon as the new tax year starts on 6 April, you can deposit a whole new year's allowance.
7. You can only have one current year's cash ISA open at any time – though some providers let you split it
While you can only pay in to one cash ISA per tax year, you can have several old ones with several different providers, or you can have a cash ISA, a stocks & shares ISA, an innovative finance ISA and a Lifetime ISA at the same time.
So if you opened a cash ISA with Barclays two years ago, you don't need to stick with it for this year's cash ISA – you can choose whichever the top payer is.
Loophole to open more than one per tax year
A few providers allow you to open and pay in to more than one cash ISA (eg, a fixed cash ISA and an easy-access cash ISA) with them in the same tax year under these rules:
- The ISAs must be with the same provider.
- You must stick to the overall cash ISA limit when totting up your combined balance between them.
- The ISAs must be with the same provider.
ISA savings safety works the same as normal savings. So provided your money is in a UK-regulated bank or building society account, it's protected under the Financial Services Compensation Scheme. Its golden rule counts for cash ISAs too...
The first £85,000 per person, per financial institution is guaranteed.
While that sounds simple, the exact rules are more complex – not every bank in the UK is UK-regulated and there are complicated rules involving how different banks are registered and what counts as a 'financial institution'. For full info about the rules, see our detailed Are your savings safe? guide.
How to maximise safety
If you've more than £85,000 of savings (including cash ISAs and others) in one bank, then, in the unlikely event it went bust, only the first £85,000 is fully guaranteed. So for total peace of mind, don't put more than this in any one institution. Spread it around instead.
The cash ISAs we include in this guide are all from banks protected by the UK's Financial Services Compensation Scheme.
Top easy-access cash ISAs
Easy-access cash ISAs let you take out your money when you want, without penalty – so are a good option if you know you'll be dipping into your savings, or if you're not sure. But if you're unlikely to need access in the short term, consider a fixed-rate ISA – many of these pay more and still let you withdraw (for a fee).
You can currently beat or match the rates below with a top 'standard' savings account, and as most people don't get taxed on savings interest, the rate should be your top priority.
However if you do need the tax advantages of an ISA, the top pick is simple. Cynergy Bank currently pays the top rate of 0.6% and you can open it online with £1.
MoneySavingExpert.com is a national website serving England, Scotland, Wales and Northern Ireland. So we try to feature accounts open to everyone, which means you need to be able to open them online, by phone or by post.
Branch-based accounts are more difficult, as unless the account is offered by one of the big banks it's unlikely that everyone will be able to reach a branch. For example, Kent Reliance Building Society sometimes offers decent branch-based accounts.
But a person in Brighton would have to travel almost 40 miles to their nearest branch to be able to open it. Similarly, someone in Carlisle couldn't access branch-based accounts offered by Ipswich Building Society as there isn't one close by.
It's always worth looking at local building societies and banks as they can occasionally have a corking branch-based account. But because we're a nationwide site, we can't feature them all.
Top fixed-rate cash ISAs
Fixed-rate savings are designed to lock money away for a set period and offer rate security in return. Yet by law, cash ISA providers MUST allow you to access your money, whenever you want it. However, some require you to close the account or transfer out to get your cash. And most will levy heavy penalties on withdrawals – up to 365 days' worth of interest.
Fixed-rate cash ISAs – what we'd go for
If you don't need the tax benefits of an ISA, normal fixed-rate savings currently pay higher rates across the board.
However if you do, OakNorth Bank currently pays the top one-year rate of 0.86% on deposits of £1 or more. Hodge Bank tops the two-year fixes at 1.15% – you can open an account with £1,000. Both accounts can be opened online and allow transfers from other providers.
Looking to fix for longer? UBL UK pays the top three-year and five-year fixed rates of 1.21% and 1.51% respectively (min £2,000). Both accounts can be opened online, via app, by post or in branch.
The ISA Savings Calculator
No matter what you're saving for, this calculator can help you work out how much you'll save by a certain date, based on your account's interest rate, how long it'll take you to set aside your target amount, and what you need to put away each month to hit a certain figure.
When using the calculator, use the AER (annual equivalent rate) for increased accuracy. It should be listed on your statement. As most accounts' interest rates are variable, obviously the answers will change if the rate does, so only use the calculator to get a rough indication of your likely outcome.
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...
Here are some common ISA-related queries. If you've got a question we've not answered below or in the text above, suggest a question in the MSE Forum.
Yes, and you should. You can transfer ISA cash anytime, but if it's one you've paid into in this tax year you must move the whole amount and close the ISA completely.
With transfers of previous years' ISAs you can split this cash across different accounts.
If you're married or in a civil partnership, if your partner dies you can inherit a one-off extra ISA allowance on top of the annual £20,000, up to the total amount they had saved in ISAs. These are known as 'additional permitted subscriptions' (APS).
You have a few choices. You can simply keep the ISA with the same provider, move it to a different provider that accepts APS (not all do), or the ISA goes to someone else but you get the extra allowance. To claim your allowance, you'll need to give your partner's full name, address, date of birth and date of death, your marriage/civil partnership certificate and their national insurance number if you know it. Some providers may also require a copy of their death certificate.
The allowance you'll inherit will depend on when your partner died:
- Before 6 April 2018. You'll inherit an allowance equivalent to the total value of your partner's ISAs at the date of death.
- On or after 6 April 2018. You'll inherit an allowance equivalent to the total value of the ISAs once their estate is settled, when their ISAs are closed, or at the third anniversary of their death, whichever is earliest – so any growth in value will be taken into account.
The inherited allowance is available to make use of for three years after your partner has passed away, or 180 days after the completion of their estate, whichever is later.
Note that inheriting the allowance is not the same as inheriting the cash in the ISA – your partner could, for example, leave some or all of their ISA money to someone else. You'd still get the extra allowance but would have to fund it with your own savings.
If you're not married or in a civil partnership you won't inherit any extra allowance.
- Before 6 April 2018. You'll inherit an allowance equivalent to the total value of your partner's ISAs at the date of death.
This is all about whether you gain more from putting savings into an ISA or using your ISA allowance for investing.
The gain from putting cash into an ISA is simple: you never get taxed on the interest. But with investing, whether you actually gain from putting it in an ISA depends on your circumstances.
Are you comfortable with an element of risk? If you invest in a cash ISA, you know that the interest rate you're given is the one you'll get. The nature of stocks & shares ISAs means that you don't have the same guarantee – there's ALWAYS risk involved when investing, as the value of your investments can go down as well as up, depending on how well your funds, bonds and shares do.
Are you eligible for capital gains? Stocks & shares ISAs exempt you from capital gains tax (a tax on profits that you only pay when you sell an asset, such as your investments). Yet for 2021/22 you can make £12,300 a year of profits before being hit by this tax, so this protection only helps those who are selling sizeable assets within one tax year – otherwise it's irrelevant.
Will you put money into bonds? If you're investing in bonds such as corporate bonds or gilts (Government bonds), you get the income without it being taxed in any case. For other bonds, a stocks & shares ISA will shelter the income from tax.
Will you get an income? If you receive an income from dividends, you pay no tax on the first £2,000 earned. Anything over that is taxed at 7.5% for basic, 32.5% for higher, and a whopping 38.1% for additional-rate taxpayers. Within a stocks & shares ISA you pay no tax on dividend income, regardless of your tax status. So if you earn more than your allowance, it can represent a significant saving.
If you pay tax on savings interest, you'd need to do a comparison between the amount of tax you'd get charged on savings outside a cash ISA and the amount of tax on any investments held outside a stocks & shares ISA. If you're unsure you could always stick to the previous ISA situation where you could only split your allowance between cash and investments 50/50.
Small investors who won't use their capital gains and are putting cash in shares investments will gain more using their cash ISAs to the limit, then putting the rest in shares. Big investors, especially those putting money in bonds, should max out their stocks & shares ISAs. Read our Stocks & Shares ISA guide for more information.
Yes, you can – and vice versa.
You can transfer your money to a cash ISA from a stocks & shares ISA and back again as many times as you like, giving you more flexibility in managing your tax-free savings. This is also the case for innovative finance ISAs, providing it allows you access to your cash – the higher rates are for longer fixed terms.
Check that your intended provider accepts transfers – some don't. And also watch out for fees on stocks & shares ISAs and innovative finance ISAs. You may be charged to set up the ISA or to leave it, so multiple transfers may lose you money.
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