If you have read our guide to the £12,000 cash ISA cap that arrives in April 2027, the obvious follow-up question is: what are the actual best-buy rates right now, in May 2026, while the full £20,000 cash ISA allowance still applies to everyone? This piece is the short companion to that explainer, with a current rates landscape 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 Always check rates at point of opening; the market moves and the headline figures here will be out of date inside a few weeks.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 1 May 2026): 4.50% (1 year), 4.48% (2 year), 4.45% (3 year), 4.40% (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 £85,000 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.
- Under-65 cash ISA cap: £12,000 from 6 April 2027. The £20,000 limit still applies to over-65s and to the Stocks and Shares / Innovative Finance / Lifetime ISA components of the overall £20,000 allowance for under-65s.
- FSCS protection: £85,000 per person per banking licence. Check that the bank you choose has its own FSCS licence rather than sharing one with a parent group.
Current rates landscape, 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 (NS&I and challenger banks broadly clustered around this level).
- 5 year fixed: approximately 4.40% AER (NS&I; some challenger banks slightly above).
NS&I British Savings Bonds (raised 1 May 2026)
- 1 year: 4.50% AER. Up from 4.07%.
- 2 year: 4.48% AER. Up from 3.98%.
- 3 year: 4.45% AER. Up from 4.02%.
- 5 year: 4.40% AER. Up from 4.05%.
- 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.
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 2pp savings income tax rise scheduled for 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, briefly
From 6 April 2027, savers under 65 will be able to subscribe up to £12,000 to a Cash ISA each year, instead of the current £20,000. The remaining £8,000 of the annual ISA allowance must go into Stocks and Shares, Innovative Finance, or Lifetime ISA components if used.
What this means for the 2026/27 tax year (the current one, running until 5 April 2027):
- You can still pay up to £20,000 into a Cash ISA this tax year. The cap does not bite until 6 April 2027.
- Anything paid into a Cash ISA in 2026/27 stays inside the wrapper regardless of the 2027 rule change. You do not lose that protection.
- If you have a one-off lump sum of cash that you want to shelter from future tax rate changes, 2026/27 is the last tax year to put up to £20,000 into a Cash ISA in a single year (for under-65s).
For the full mechanics of the cap, who is affected, and the trade-offs, see the Cash ISA Cap 2027 guide.
The compound “savings squeeze” from April 2027
The £12,000 under-65 Cash ISA cap does not arrive alone. From 6 April 2027 several savings-and-investment tax changes announced in the October 2025 Autumn Budget all land in the same tax year, producing a noticeably tighter regime for ordinary savers and investors than the one in force in 2026/27.
Three changes worth understanding together:
- Savings income tax rises by 2 percentage points at every band. Basic rate goes from 20% to 22%, higher rate from 40% to 42%, and additional rate from 45% to 47%. The same 2pp rise applies to property income tax. The Personal Savings Allowance (£1,000 basic-rate / £500 higher-rate / nil additional-rate) is unchanged, but the tax above that allowance bites harder.
- Dividend tax rates also rise by 2 percentage points at every band. Outside an ISA wrapper, dividends in 2027/28 will be taxed at 10.75% (basic), 35.75% (higher) and 41.35% (additional), up from the 2026/27 levels.
- The £12,000 under-65 Cash ISA cap arrives at the same time. For someone who was using the full £20,000 cash ISA allowance to shelter savings income, the cap removes £8,000 of annual sheltering capacity in the same tax year that the headline tax rate on the unsheltered slice goes up.
The practical consequence is that 2026/27 (the current tax year, running until 5 April 2027) is the last full tax year in which a saver under 65 has both the full £20,000 cash ISA allowance and the lower (2026/27) savings-tax rates. From 6 April 2027, both levers tighten simultaneously. A higher-rate taxpayer with £30,000 outside an ISA earning 4.5% interest, for example, currently faces tax on interest above the £500 PSA at 40%; from April 2027 the same interest above the PSA is taxed at 42%, and a smaller proportion of new contributions each tax year can be sheltered in a cash ISA.
For savers with cash sitting outside ISAs, the editorial takeaway is straightforward: using the 2026/27 cash ISA allowance fully, while the £20,000 limit and the current tax rates both still apply, locks in tax-free treatment that will not be available on the same terms again. This is not a reason to take ISA decisions you would not otherwise take; it is a reason not to leave the 2026/27 allowance unused if you would have used it anyway.
Source: GOV.UK: Income tax changes to tax rates for property, savings and dividend income.
FSCS protection in practice
The Financial Services Compensation Scheme protects deposits up to £85,000 per person per banking licence. 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 £85,000 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 £170,000 (£85,000 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 £85,000 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?
The £12,000 under-65 Cash ISA cap from April 2027 does not apply to you. Savers aged 65 and older can continue to subscribe up to £20,000 each year to a Cash ISA, subject to the overall annual ISA allowance. The policy intent is to encourage younger savers toward longer-term investing while leaving the existing cash-focused regime for older savers.
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.
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