Best ISA Rates

ISAs explained

What is an ISA and what does ISA stand for?

Individual Savings Accounts, more commonly known as ISAs, are a tax-free way of saving brought in by the UK Government in 1999 to replace Personal Equity Plans (PEPs) and Tax-Exempt Special Savings Accounts (TESSAs).

The tax free benefits of ISAs depend on your personal circumstances and may change in the future.

According to the Government’s latest Annual Savings Statistics, approximately 12.4 million adult ISAs were subscribed to in 2022/23 with total deposits coming to around £71.6 billion.

What are the different types of ISA?

There are four main types of ISA available:

• Cash ISAs
• Stocks and Shares ISAs
• Lifetime ISAs (LISAs)
• Innovative Finance ISAs (IFISAs)

Cash ISAs are perhaps most similar to traditional savings accounts and come in different varieties:

• Easy access cash ISAs 
• Notice cash ISAs
• Fixed rate cash ISAs
• Regular savings cash ISAs

You’ll also find Junior ISAs (JISAs) available to those under the age of 18.

Who is eligible to open an ISA, and is there an age limit?

Any UK citizen over the age of 18 can open an ISA; this includes crown servants, members of the Armed Forces, overseas diplomats and civil servants, as well as their spouse or civil partner.

As for those under the age of 18, parents and guardians can open a JISA on behalf of a child, while 16- and 17-year-olds can apply for an account themselves.

Why you might need an ISA

While basic-rate taxpayers can earn up to £1,000 in tax-free interest from traditional savings accounts each year under the Personal Savings Allowance (PSA), wage growth and frozen Income Tax thresholds mean many are set to be dragged into a higher tax band and have their allowance slashed.

In fact, the Office for Budget Responsibility (OBR) estimated that three million more people will move to the higher-rate tax bracket between 2022/23 and 2028/29 and have their PSA halved to £500. Meanwhile, it predicted there will be 400,000 more additional-rate taxpayers (who don’t qualify for a tax-free savings allowance at all).

What’s more, with interest rates still higher than has been seen in previous years, those with smaller balances may find themselves at risk of exceeding their PSA for the first time.

So if you haven’t already begun your cash ISA comparison, 2025 could be the year to get started. Our charts linked above are all regularly updated so you can compare the best ISA rates currently available.

How does an ISA work?

After opening an ISA, any returns received from funds held in the account are automatically exempt from taxation. This is in contrast to traditional savings accounts which may require you to pay tax on interest earned depending on whether you exceed PSA.

However, you must bear in mind the annual ISA allowance.

What is the ISA allowance and when does it reset?

The annual ISA allowance is the maximum amount you can deposit into an ISA or across multiple ISAs within the tax year. As of the 2024/25 tax year, this threshold stands at £20,000.

Each tax year, your allowance will reset. This means when the new tax year begins on 6 April 2025, you’ll receive a fresh ISA allowance of £20,000 to allocate.

What does the ISA ‘subscription limit’ mean, and does it differ by type?

‘Subscribing’ simply means to pay into an ISA, and the subscription limit is the maximum amount you can deposit into an account each year.

Cash ISAs, Stocks and Shares ISAs and Innovative Finance ISAs can all receive up to the maximum combined allowance of £20,000. Meanwhile, Junior ISAs and Lifetime ISAs have a smaller subscription limit of £9,000 and £4,000, respectively.

What new ISA rules have been introduced this year?

The Autumn Budget 2024 confirmed the annual ISA allowance will remain at £20,000 until 5 April 2030. Meanwhile, subscription limits for Junior ISAs and Lifetime ISAs will also be maintained at their current levels until the same date.

How many ISAs can I have?

As of 6 April 2024, you can open and pay into multiple of the same type of ISA within a single tax-year. This is a deviation from previous rules which stipulated you could only subscribe to one of each of the four main types of ISA in a tax-year.

For instance, you could open two or more cash ISAs to save towards different goals, so long as your total deposits don’t exceed the annual ISA allowance. Alternatively, you could use multiple Stocks and Shares ISAs with different providers to potentially gain access to a wider range of investment opportunities.

Importantly, it should be noted this rule doesn't apply to Lifetime ISAs and Junior ISAs; you can still only pay into one of each type of these accounts in the same tax-year.

Related guide: How many ISAs can I have?

Can I split my ISA allowance across different types?

You can split your annual ISA allowance any number of ways across the various types of ISA, providing you don’t exceed the £20,000 yearly limit.

For example, you could choose to save half of your allowance (£10,000) in cash ISAs, invest £6,000 in Stocks and Shares ISAs and put away £4,000 in a Lifetime ISA.

That being said, you’re under no obligation to split the allowance; you could also deposit the full £20,000 into a single account should you wish.

Can I put money into an ISA every month?

Whether you can pay into an ISA every month will depend on the type of account you hold. Regular savings cash ISAs, for example, are specifically designed for monthly contributions.

While many variable rate cash ISAs, such as easy access and notice ISAs, will also allow for further deposits, some fixed rate accounts may prohibit you from making additions to your initial deposit.

You can check whether an ISA accepts further additions by clicking ‘view further details’ next to an account in any of our ISA charts.

What’s the difference between a fixed rate and an easy access cash ISA?

While easy access and fixed rate ISAs are both types of cash ISAs, there are some differences to be aware of when deciding which account to open:

Generally speaking, an easy access cash ISA may be better suited if you regularly find yourself dipping into your savings pot, or if it’s likely you’ll need access to your cash at short notice (such as in an emergency).

In contrast, a fixed rate cash ISA may be preferred by those with a longer-term savings goal, who want guaranteed returns and are willing to lock away their cash.

Is there a penalty for withdrawing money from a fixed-rate ISA early?

Like fixed bonds, most fixed ISAs prohibit withdrawals. However, some allow access to the money in your account before the term ends. This is known as ‘early access’ and often incurs a loss of interest penalty and/or account closure.

What happens when a fixed term ISA matures?

There are a few options as to what happens when a fixed ISA term comes to an end; your provider should be in contact prior to your account maturing to explain your choices. This could include:

• Renewing your ISA with your existing provider by either depositing some or all of your funds into a new fixed or variable account
• Withdrawing your funds and closing the account.

If you don’t take any action, your funds will usually be automatically redeposited into an instant access cash ISA, at which point you could choose to transfer it to another provider.

Are there any ethical investment options within Stocks and Shares ISAs?

If you’re open to investing, you could consider a Stocks and Shares ISA. Over the long run, these accounts offer the potential for greater growth, although it’s crucial to remember your capital is at risk and returns are never guaranteed.

Whether you choose to manage your own investments, have a financial adviser or fund manager oversee a portfolio on your behalf or use a platform, there are plenty of investment opportunities to choose from.

Depending on your personal beliefs, you can also invest ethically in environmentally friendly businesses, those that promote human rights and seek to limit human suffering.

What’s the difference between a Lifetime ISA and a regular ISA?

While most ISAs have a range of uses, Lifetime ISAs (LISAs) are purpose-built for saving a deposit for a first home or putting away money for retirement. These accounts come in two forms: either a cash LISA or a Stocks and Shares LISA.

In contrast to other types of ISA, the Government applies a 25% bonus on deposits up to £4,000 a year made into a LISA – a welcome boost to prospective buyers or those looking ahead to retirement. However, whereas most ISAs are available to any UK citizen over the age of 18, LISAs can only be opened by those aged 18 to 39.

Are there ISAs that allow peer-to-peer lending?

Perhaps the least well-known of the four main types of ISA, Innovative Finance ISAs (IFISAs) facilitate peer-to-peer lending. Instead of going through a third-party (such as a bank), this is where your funds are lent out directly to borrowers.

An ideal outcome is that your investment is returned in full – plus interest - by the end of the agreed term, but this isn’t always guaranteed. For this reason, the Financial Conduct Authority (FCA) considers investments held in IFISAs to pose a high risk and, what’s more, they may not be protected by the Financial Services Compensation Scheme (FSCS).

How do ISA interest rates compare to regular savings accounts?

It’s sometimes (but not always) the case that cash ISAs pay lower interest rates than their more traditional counterparts. There are a few possible explanations as to why this is:

• Challenger banks tend to offer some of the most competitive rates as they attempt to entice customer deposits. But, because they’re often new to the market, many initially choose to launch traditional savings accounts rather than ISAs.

• ISAs can be more expensive for a provider to manage as a greater amount of administration is involved in reporting to HMRC and more complex systems are required to enable transfers out.

• Because providers must allow ISAs to be transferred out, they may also factor the potential loss of funds into their pricing. In contrast, withdrawals from fixed bonds are prohibited and early access is also usually denied.

Despite this, an ISA could still be more cost-effective if it’s likely you’ll pay tax on the interest earned from a traditional savings account.

Related guide: Cash ISA or savings account: Which should I choose?

Will ISA interest rates increase in response to market conditions?

Whether the interest rate paid by a cash ISA will respond to wider market conditions depends on the type of account.

Variable rate cash ISAs, such as easy access, notice and some regular savings ISAs, are particularly susceptible to the current economic climate, and any changes to the Bank of England base rate can quickly see returns rise or fall.

While providers also usually factor market forecasts into their fixed pricing, keep in mind if you have a fixed ISA the interest rate you receive won’t change over the course of the term.

With the International Monetary Fund (IMF) revealing in a press conference earlier this year it expects the UK’s central interest rate to be cut four times in 2025, this suggests we could see average rates steadily decline.

However, as has been the case in the past, it doesn’t take much to spook the markets which, in turn, could cause interest rates to rise. It’s also important to remember that providers have their own targets to meet and may buck trends in a bid to entice customer deposits.

Related guide: UK base rate explained – and how to respond to changes

Are ISAs affected by inflation, and how can I maximise protection against it?

While returns on ISAs don’t track the rate of inflation, they can still be used to prevent it eroding the purchasing power of your money (i.e. how much your money can buy).

Good practice is to regularly review your savings portfolio; if an account offers less than the rate of inflation, your money is losing value in real terms, and it may be worth switching to a higher-paying alternative.

What is the best ISA rate at the moment?

Banks and building societies are constantly reviewing their product ranges and pricing, so it’s good practice to regularly review top rate tables (such as the one above) for help finding the best ISA rates UK providers currently have on offer.

But even though the interest rate may be the most influential feature of a savings account or ISA, it’s important to consider other factors, such as whether an account’s headline rate is bolstered by a short-term introductory bonus and if it imposes a penalty for exceeding a certain number of withdrawals within a given timeframe or for accessing your cash before the term ends.

How often can I switch providers to find better ISA rates?

ISA transfers make it simple to switch between providers without losing your tax-free benefits.

There’s no limit on the number of times you can transfer from one account to another, but bear in mind while a provider must allow transfers out, they are under no obligation to accept transfers in.

Before making the switch, it’s therefore important to check which types of ISA (if any) your prospective provider accepts transfers in from. To do so, click ‘view further details’ next to a listing on any of our ISA charts. Alternatively, you can change your investment type to ‘ISA transfer’ by selecting ‘full search’.

Are there any limits on transferring between different types of ISAs?

There are no universal restrictions when it comes to transferring between different types of ISAs as it’s at a provider’s discretion which accounts they accept transfers from. The only exceptions are Junior ISAs; these accounts can only be transferred to another Junior ISA.

Keep in mind, fees sometimes apply when transferring between two different types of ISA. If you transfer a Lifetime ISA to a cash ISA, for instance, this will usually incur a 25% penalty. Similarly, a loss of interest penalty may be imposed for transferring out a fixed rate ISA, as this could be seen as accessing your cash before the term ends.

What are the best cash ISAs in 2025?

The best type of ISA will depend on your personal circumstances, such as the amount of access you need to your cash, your savings goals and your attitude towards risk.

Those looking for guaranteed returns may prefer a cash ISA – with easy access cash ISAs offering the most flexibility when it comes to making further additions and withdrawals.

If you’re saving towards buying your first home or for your retirement, meanwhile, a Lifetime ISA is specifically designed to help meet these goals.

Otherwise, those looking for an investment opportunity and who are willing to put their capital at risk could consider a stocks and shares ISA.

Also, bear in mind that, while the highest paying ISA in the UK may be best for some, it may not be suitable for everyone.

What ISA options exist for people over 60, and what makes them a good option?

The vast majority of ISAs have no upper age restriction; one exception is the Lifetime ISA, which can only be opened by those under the age of 40.

If you’re aged over 60, this means there are still plenty of competitive ISAs to consider. A good option will be that which offers the best returns on your hard-earned cash while meeting any other requirements you may have of the account.

When should I open an ISA?

You can open an ISA at any time, but you need to consider how much you have deposited in ISAs in the current tax-year. If you have used up your annual ISA allowance, you won’t be able to open another ISA until the new tax-year starts and your allowance resets. But, if you want to change accounts or move providers, you may be able to transfer your ISA instead of opening a new one.

You may see more attractive deals on offer towards the end of a fiscal year (5 April) as providers seek custom from savers looking to use up their annual allowance, in a phenomenon known as ISA season.

This trend typically continues into the new tax-year (from 6 April), with providers aware customers have a fresh allowance to distribute. Nevertheless, this doesn’t prevent banks and building societies from increasing rates at other times of the year, either in response to changes to the Bank of England base rate or as they look to raise funds, gain new customers and meet targets.

It’s good practice to regularly review the top ISA rates and consider switching to a new account if you find more competitive returns available.

Are ISAs safe? Is my money protected?

The amount of protection your funds are afforded depends on the type of ISA your money is held in. As with traditional savings accounts, the Financial Services Compensation Scheme (FSCS) protects balances of up to £85,000 in most cash ISAs (although it’s important to remember this limit covers any funds held with providers that operate under the same banking licence).

Similarly, investments of up to £85,000 in a stocks and shares ISA are protected by the FSCS should your provider go bust. It’s important to note this protection doesn’t cover any losses made on your investment.

Equally, returns aren’t guaranteed with an IFISA either. As a form of peer-to-peer lending (P2P), your funds won’t be protected by the FSCS if your provider were to collapse.

Read our guide on FSCS protection to learn more; for more information on providers that share a banking licence, you can also check out our guide to who owns whom.

Are there any ISA alternatives for those who max out their annual allowance?

If you’ve paid the maximum amount into ISAs this tax-year, there are other options you could consider to continue saving tax-efficiently.

• Traditional savings accounts: There’s no limit on the amount you can deposit into traditional high interest savings accounts each year and you won’t be taxed on any interest earned so long as you don’t exceed your Personal Savings Allowance

• Premium Bonds: A savings product offered by the Government-backed brand National Savings & Investments (NS&I) where, rather than receiving interest, bondholders are entered into a monthly draw to win tax-free cash prizes

• Pensions: Savings in a pension will grow tax-free in much the same way as ISAs and, what’s more, you’ll receive tax-relief on your contributions. But, bear in mind pensions pose more risk than cash ISAs as they comprise investments and usually you won’t be able to access your cash until reaching 55 (the current Normal Minimum Pension Age; this is set to rise to 57 from 2028)

• General Investment Accounts (GIAs): Allow you to invest with no yearly cap on contributions. However, you’ll need to pay Capital Gains Tax (CGT) on annual earnings in excess of £3,000 and your capital is at risk.