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What are the best cash ISA accounts in the UK?

An ISA stands for an individual savings account, it is an investment arrangement which can be used by UK residents. It is a tax-free savings or investment account which allows for maximum returns on savings.

Mani

Mani Dhanoa

October 10th, 2023·5 min read
What are the best cash ISA accounts in the UK?

An ISA stands for an individual savings account, it is an investment arrangement which can be used by UK residents. It is a tax-free savings or investment account which allows for maximum returns on savings.

Types of ISAs

There are two types of cash ISAs:

  • Easy access: you can withdraw money whenever you like, however, the rate may fluctuate.
  • Fixed: A set rate of interest over a certain period and your money is locked for a set duration (usually 1 to 5 years).

From this, we can see there is a tradeoff and it is important to take into account these differences when deciding to use an ISA or which type.

Ways ISAs are different to each other and things you need to consider:

  • How much can be paid and withdrawn
  • If there is a notice period required, also known as notice cash ISAS
  • Government regulations should also be taken into account, they set a limit every year on how much you can save into it.
  • Individuals who fall into higher tax brackets get a £500 personal savings allowance, an ISA would be useful for smaller savings.
  • Protection against income tax if you earn a substantial amount of interest from savings.
  • Can only have one cash ISA a year, however, some banks have introduced combined ISAs or portfolio ISAs where you can open multiple accounts under one, this is useful if you want the benefits of a fixed rate and easy access to ISA.

Which Cash ISAs pay the most interest?

Easy Access

Easy access ISARateMin investmentDescription
Leeds Building Society4.80%£1,000Not a portfolio ISA, interest is paid annually and on maturity.
Oak North Bank4.50%£1Interest is paid monthly. 
Moneybox4.75%£500 Up to three withdrawals in a 12-month period without affecting interest rate. In the case of 4 or more withdrawals, a lower rate of 0.75% will be applied for the remainder of the 12-month term. Interest paid annually.
Shawbrook4.72%£1,000Interest paid annually or monthly, this is not a portfolio ISA.
Cynergy4.70%£1 Up to three withdrawals in a 12-month period without affecting interest rate. In the case of 4 or more withdrawals, a lower rate of 0.75% will be applied for the remainder of the 12-month term. Interest paid annually.

1-year fixed

1-year fixed ISARateMin investment
Shawbrook5.83%£1,000
Charter5.80%£5,000
Close Brothers5.78%£10,000

Now that we’ve listed the best ISAs which one is THE best may be the question… This depends on your circumstances and there are pros and cons of each account depending on the person. Some may wonder if an ISA is really worth it, since the introduction of the personal savings allowance in 2016 many people no longer pay taxes on their interest when using a standard savings account due a capital gains tax free allowance. However, with the Bank of England raising their base rate of interest, savers are seeing a greater return on their money which could push them over their personal savings allowance.

ISAs are generally best for those with large chunks of money they wish to keep in cash and have the time to keep an eye on interest rates if opting for a variable rate ISA.

Another useful product to add is Cash Lifetime ISA (LISA) which is for those under 40s, this gives you a 25% government bonus on your savings, common uses of this tend to be for first home deposits or retirement savings, so this could be something to consider!

Also in the event the company you are with goes bust up to 85k of cash is protected by the FSCS.

We hope this article has given you a good insight into ISAs!

savings
Mani
WRITTEN BY

Mani Dhanoa

CEO/Founder at Mydus
Ellipsol

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