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 form of saving brought in by the UK Government in 1999 to replace Personal Equity Plans (PEPs) and Tax-Exempt Special Savings Accounts (TESSAs).

How does an ISA work?

Any returns received from funds held in an ISA are automatically exempt from being taxed. This is in contrast to traditional savings accounts which may require you to pay tax on interest earned, depending on your Personal Savings Allowance. However, you’ll need to be mindful of 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 the 6th of April each year, you’ll receive a fresh ISA allowance of £20,000 to allocate.

How many ISAs can I have?

From 6 April 2024, you can open and pay into multiple ISAs of the same type in the same tax-year. So, for example, you could open two or more cash ISAs, as long as your total deposits during the tax-year don’t exceed the annual £20,000 ISA allowance. However, this rule doesn't apply to Lifetime ISAs and Junior ISAs. You can only pay into one of each type of these accounts in the same tax-year.

What are the different types of ISA?

There are four main types of ISA available:

Cash ISAs

Stocks and shares ISAs

Lifetime ISAs

Innovative Finance ISAs (IFISAs)

Cash ISAs are perhaps most similar to traditional savings accounts. There are different varieties available, and you can find the best cash ISA rates for each type below:

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.

What is the best type of ISA?

The best type of ISA will depend on your needs and 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 to opt for 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 who are looking for an investment opportunity and are willing to put their capital at risk could consider a stocks and shares ISA.

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.

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.

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

Equally, returns aren’t guaranteed with an Innovative Finance ISA (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. moneyfactscompare.co.uk does not recommend the use of IFISAs. 

Read our guide on FSCS protection to learn more.  

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 for that tax-year, you won’t be able to open another ISA until the new tax-year starts and your ISA allowance resets.

However, 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 find providers offer more attractive deals towards the end of a fiscal year (5 April) as they 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 their customers will have a fresh allowance to distribute. However, this doesn’t prevent providers 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.