What’s changed: Updated 28 October 2026: the Budget dropped the £12,000 cash ISA cap and raised savings income tax to 24%, 44% and 49% from April 2027; see what the UK Budget 2026 changes for savers. Earlier, 19 August: NS&I bond rates updated. Full update history.
If you have read our guide to the £12,000 cash ISA cap that was due in April 2027, the obvious follow-up question is: what are the actual best-buy rates right now, in May 2026? This piece is the short companion to that explainer, with the current rates and the practical considerations of picking a Cash ISA in this tax year.
None of this is investment advice. It is a factual summary of publicly available rates and rules as of mid-May 2026. Always check rates at point of opening; the market moves and the headline figures here will be out of date inside a few weeks.
The short version
- Top easy-access Cash ISA in May 2026: approximately 4.51% (Trading 212, variable rate; check the current figure before applying).
- Top fixed-rate Cash ISAs: approximately 4.66% (1 year, UBL UK) and 4.58% (2 year, Tandem Bank). Smaller specialist banks often top the tables.
- NS&I British Savings Bonds (raised 18 August 2026): 4.82% (1 year), 4.81% (2 year), 4.83% (3 year), 4.85% (5 year). Fixed-term, not strictly an ISA wrapper but worth comparing on rate. Government-backed; not always best-buy on rate alone but offers full Treasury backing of capital (no £120,000 FSCS cap, because the backing is HM Treasury directly).
- NS&I Direct ISA (raised 1 May 2026): 3.80% AER, variable; full Treasury backing as above; minimum £1, maximum £20,000 per tax year. Competitive for savers who value government backing over the top-of-table commercial rate. Worth comparing against the 4.21-4.51% easy-access commercial Cash ISAs in this list.
- Annual ISA allowance (2026/27): £20,000 across all ISA types combined for adults.
- Cash ISA limit from 6 April 2027: £20,000 for everyone. A £12,000 cap for under-65s was due to start then, but the Budget on 28 October 2026 dropped it.
- FSCS protection: £120,000 per person per banking licence, raised from £85,000 on 1 December 2025. Check that the bank you choose has its own FSCS licence rather than sharing one with a parent group.
Where rates stand, May 2026
The Cash ISA market in May 2026 looks like this. Specific provider rates change frequently; always confirm the current rate on the provider’s site before applying.
Easy-access Cash ISAs
- Trading 212 Cash ISA: approximately 4.51% AER, variable. Mobile-first; flexible withdrawals; FSCS protected.
- Bank of Ireland UK Easy Access Cash ISA: approximately 4.21% AER, variable. Household-name brand; branch availability; FSCS protected via Bank of Ireland UK’s UK licence.
- Most high-street bank easy-access Cash ISAs sit between 2.5% and 3.5%, lower than the best-buy market.
Fixed-rate Cash ISAs
- 1 year fixed: approximately 4.66% AER (UBL UK and similar challenger banks at the top of the table).
- 2 year fixed: approximately 4.58% AER (Tandem Bank and similar).
- 3 year fixed: approximately 4.45% AER (challenger banks broadly clustered around this level). NS&I’s own three year bond pays more, 4.83%, but it sits outside the ISA wrapper and its interest is taxable.
- 5 year fixed: approximately 4.40% AER (some challenger banks slightly above). NS&I’s five year bond pays 4.85%, again outside the ISA wrapper and taxable.
NS&I British Savings Bonds (rates as at 18 August 2026)
- 1 year: 4.82% AER. Up from 4.72%.
- 2 year: 4.81% AER. Up from 4.70%.
- 3 year: 4.83% AER. Up from 4.68%.
- 5 year: 4.85% AER. Up from 4.75%.
- Minimum £500, maximum £1 million per product. No early withdrawal during the fixed term. Backed by HM Treasury, so capital protection is effectively unlimited (no FSCS cap because of the government guarantee).
- Note: NS&I products outside the ISA wrapper. Interest is taxable, used against the Personal Savings Allowance (£1,000 basic rate / £500 higher rate). For higher rate taxpayers above the PSA, this matters.
Two things about that table are worth saying out loud. First, the “up from” figures are the issue immediately before this one, not the 1 May figures this guide originally carried (4.50%, 4.48%, 4.45% and 4.40%). NS&I has raised these bonds three times since May, on 23 June, 31 July and 18 August, so if you are comparing against a figure you noted in the spring you are three steps behind rather than one.
Second, look at the shape rather than the headline. On 31 July the five year went up by twenty hundredths of a percentage point while the one, two and three year terms each moved three, which took it from the lowest of the four to the highest. On 18 August all four rose again and the gap narrowed: the three year moved most, and the spread across the four terms is now four hundredths of a point rather than seven. The five year is still the highest, and still only three hundredths above the one year. A provider paying more to lock money up for five years is expressing a view about where rates are going, and it is the opposite of the view implied by a normal savings ladder. Whether that is a view worth taking is a judgement about your own timescales, not something a rate table settles.
How to read the best-buy tables
Best-buy tables (MoneySavingExpert, MoneyWeek, MoneyFacts, Be Clever With Your Cash, and others) all draw on the same underlying market data with slightly different filters. A few things worth knowing:
- The top rate is not always the right choice. A small specialist bank with a 4.55% headline rate might offer a worse customer experience than a recognised brand at 4.30%. For some savers, the convenience of a familiar provider justifies the rate differential.
- Variable rates change. The 4.51% you see today on a “best buy easy-access” might drop to 3.95% in three months. Tracking variable rates is a small ongoing task; some savers prefer fixed terms specifically to avoid this.
- Flexible ISA features matter. Some Cash ISAs allow you to withdraw and replace funds within the same tax year without affecting your annual allowance (the “flexible ISA” feature, available since 2016 on accounts that offer it). Not all best-buy easy-access ISAs are flexible; check the small print.
- Multiple ISAs in one year is now allowed. Since April 2024 you can open and pay into multiple ISAs of the same type in the same tax year, subject to the overall £20,000 limit. This makes rate-shopping easier than it used to be.
Cash ISA vs other tax-free options
A Cash ISA is not the only way to hold cash savings tax-free. The Personal Savings Allowance (PSA) covers a chunk of interest from any ordinary savings account:
- Basic rate taxpayer: £1,000 of interest tax-free each year via the PSA.
- Higher rate taxpayer: £500 of interest tax-free each year.
- Additional rate taxpayer: no PSA.
At a 4.50% rate, £1,000 of interest equates to a balance of around £22,000 in a savings account. Below that, the PSA covers most basic-rate savers; the Cash ISA wrapper adds limited extra value (and may even underperform on rate, since some non-ISA accounts pay marginally more than the ISA equivalent at the same bank).
Where the Cash ISA wrapper does add clear value:
- Higher rate and additional rate taxpayers with significant cash savings, where the PSA is either £500 (HR) or zero (AR).
- Savers who are likely to cross into a higher tax band in future years; the ISA wrapper protects the savings from any future tax rate rises (such as the rise in savings income tax to 24%, 44% and 49% from April 2027, see our dividend tax guide).
- Savers building a long-term tax-free pot. The wrapper persists year on year; what is inside the ISA stays inside the ISA, no matter how rates and taxes change.
- Anyone with savings above the practical limit covered by the PSA at current rates (around £22,000 to £25,000 in mid-2026).
The April 2027 under-65 cap has been dropped
From 6 April 2027, savers under 65 were due to be limited to £12,000 a year in a Cash ISA, instead of £20,000. The Budget on 28 October 2026 dropped that cut: the government “has decided not to reduce the cash ISA limit, so that it remains at £20,000.” The Treasury says the regulations to keep the £20,000 limit will be laid before Parliament in November 2026.
So the cash ISA limit for 2027/28 is the same as for 2026/27, £20,000, whatever your age. Our Cash ISA Cap 2027 guide explains the rule that was planned, and our guide to what the UK Budget 2026 changes for savers covers the rest of the Budget.
Tax on savings from April 2027
The cash ISA limit is staying at £20,000, but tax on savings interest held outside an ISA is going up. The Autumn Budget of 26 November 2025 raised the savings income tax rates by 2 percentage points from 6 April 2027, and the Budget of 28 October 2026 added a further 2 points from the same date.
- Savings income tax from 6 April 2027: 24% basic rate, 44% higher rate and 49% additional rate, up from 20%, 40% and 45% in 2026/27. The Personal Savings Allowance (£1,000 basic-rate, £500 higher-rate, nil additional-rate) is unchanged.
- Dividend tax is unchanged for 2027/28: 10.75% basic, 35.75% higher and 39.35% additional, the rates in force since 6 April 2026, with the £500 dividend allowance.
- The cash ISA limit stays at £20,000 for all ages, so the planned cut in how much cash can be sheltered each year no longer applies.
To take an example: a higher-rate taxpayer with £30,000 outside an ISA earning 4.5% interest currently pays 40% on interest above the £500 Personal Savings Allowance. From April 2027 the same interest above the allowance is taxed at 44%.
Sources: GOV.UK: Income tax changes to tax rates for property, savings and dividend income; HM Treasury and HMRC: Budget 2026, overview of tax legislation and rates.
FSCS protection in practice
The Financial Services Compensation Scheme protects deposits up to £120,000 per person per banking licence, a limit raised from £85,000 on 1 December 2025. Some practical implications:
- Several brands can sit under one banking licence. For example, several savings brands historically shared a Bank of Scotland licence (part of Lloyds Banking Group); their combined balances counted against one £120,000 limit. Always check the current FSCS coverage statement on the provider’s site.
- If you have very large cash savings, spreading them across separate licensed banks is the standard approach to keep each pot within the FSCS limit.
- NS&I products are not FSCS-protected because they are HM Treasury-backed. The Treasury guarantee is effectively unlimited; FSCS rules do not apply.
- Joint accounts are covered up to £240,000 (£120,000 per person on the joint account).
Practical steps if you are opening a Cash ISA in May 2026
- Decide easy-access or fixed. Easy-access gives you flexibility but variable rates; fixed gives you certainty but locks the money up. Most savers use a mix.
- Check current best-buy tables on the day. Rates move. MoneySavingExpert, MoneyWeek, and MoneyFacts are the standard reference points.
- Verify FSCS coverage. If you have significant savings, make sure no single banking licence holds more than £120,000 of your cash.
- Confirm the ISA is flexible (if that matters to you) before opening. Not all are.
- Apply online, in most cases. Challenger banks typically open accounts within a day; high-street banks may take a few days.
- Note the transfer-in process. Moving funds from an existing Cash ISA with another provider requires an ISA transfer form; do not withdraw the funds and re-deposit, which would lose the existing wrapper status.
FAQ
Can I have a Cash ISA with one provider and a Stocks and Shares ISA with another in the same tax year?
Yes. The £20,000 annual ISA allowance is shared across all ISA types but you can split it across different providers. Since April 2024 you can also pay into multiple ISAs of the same type in the same tax year (so you could have two Cash ISAs being funded, for example, as long as the combined contributions stay within £20,000).
What happens if I exceed the £20,000 allowance by mistake?
HMRC will normally identify the excess and tell you. The excess is removed from the ISA wrapper and the interest on it becomes taxable. There is no formal penalty for an honest mistake, but the protection is lost on the over-subscribed amount. Track your contributions carefully if you are paying into multiple ISAs.
Do junior ISAs and adult ISAs count toward the same allowance?
No. The Junior ISA allowance (£9,000 in 2026/27) is separate from the adult £20,000 allowance. Children under 18 can have a Junior ISA in their own name (or a Cash ISA from age 16); these are not subscribed against the adult limit.
Can I transfer my Cash ISA between providers without affecting my annual allowance?
Yes. ISA transfers between providers do not count against your £20,000 annual subscription limit, provided you use the official ISA transfer process (not a withdrawal and re-deposit). Most providers handle transfers electronically within two to three weeks.
What if I am 65 or older?
You can continue to subscribe up to £20,000 a year to a Cash ISA, within the overall annual ISA allowance. The £12,000 cap that was due for under-65s from April 2027 was dropped at the Budget on 28 October 2026, so the limit is now the same at every adult age.
Where to go from here
- Related Savvy Investor guides:
- HMRC on ISAs: gov.uk: Individual Savings Accounts
- NS&I British Savings Bonds: nsandi.com
- FSCS coverage check: fscs.org.uk/check
- Best-buy tables: MoneySavingExpert, MoneyWeek, MoneyFacts, Be Clever With Your Cash.
Rates and figures in this article are accurate as of 13 May 2026. Cash ISA rates change frequently; always confirm the current rate on the provider’s site before opening an account. This is general information, not personal financial advice.
Update history: 28 October, 19 August and 1 August 2026
Update, 28 October 2026. The Budget dropped the £12,000 cash ISA cap for under-65s that this article described as starting on 6 April 2027; the cash ISA limit stays at £20,000. It also raised savings income tax from April 2027 to 24%, 44% and 49%, two points above the 22%, 42% and 47% this article gave. The summary, the cap section, the savings tax section and the over-65s answer have been rewritten to match. One error from before the Budget has also been corrected: the article said dividend tax would rise in 2027/28, to 41.35% at the additional rate. The rise took effect on 6 April 2026, the additional rate is 39.35%, and the rates are unchanged for 2027/28. The May 2026 best-buy rates are unchanged and have not been re-verified. Our guide to what the UK Budget 2026 changes for savers, investors and pensioners covers the detail.
Update, 19 August 2026: NS&I raised its fixed-rate British Savings Bonds again on 18 August, three weeks after the 31 July rise. On the Growth option they now pay 4.82% (1 year), 4.81% (2 year), 4.83% (3 year) and 4.85% (5 year), gross and AER, and the NS&I section below has been updated to match. The comparison this guide is really about has not changed, though. Those are taxable bonds outside the ISA wrapper, so for anyone already using their Personal Savings Allowance a 4.85% bond is not automatically better than a lower-rate cash ISA. The best-buy ISA figures elsewhere in this article are dated May 2026 and have not been re-verified; check any rate at the point of opening. Source: NS&I press release, 18 August 2026.
Update, 1 August 2026: The NS&I section below has been refreshed. On 31 July NS&I raised its fixed-rate British Savings Bonds again, to 4.72% (1 year), 4.70% (2 year), 4.68% (3 year) and 4.75% (5 year). The five year is the one that moved: up twenty hundredths of a point from 4.55%, against three hundredths on each of the shorter terms, which makes it the best of the four. Note the comparison this guide is really about, though. Those are taxable bonds outside the ISA wrapper, so for anyone already using their Personal Savings Allowance a 4.75% bond is not automatically better than a lower-rate cash ISA. The best-buy ISA figures elsewhere in this article are dated May 2026 and have not been re-verified; check any rate at the point of opening. Source: MoneySavingExpert, 31 July 2026.