Best Cash ISA Rates Right Now — and Why Your 2026/27 Allowance Matters More Than Usual

If you haven't used this year's ISA allowance yet, there's an added reason to act before April 2027: the tax-free cash ISA allowance for under-65s is being cut from £20,000 to £12,000 from 6 April 2027, under reforms confirmed in the Chancellor's November Budget, according to Fidelity's coverage of the change.

What's changing and when

From 6 April 2027, anyone under 65 will only be able to put £12,000 tax-free into a cash ISA each year — the remaining £8,000 of the overall £20,000 ISA allowance will have to go into a stocks and shares ISA or Innovative Finance ISA instead. Savers 65 and over keep the full £20,000 cash ISA allowance, per gov.uk's factsheet. A new 22% charge will also apply to interest earned on uninvested cash sitting inside a stocks and shares ISA.

The reaction hasn't been universally warm — the Chair of the Treasury Committee said the reforms risk "complicating the ISA landscape and confusing consumers" rather than achieving the government's goal of shifting more household savings into investments.

This year's best rates

None of this affects your 2026/27 allowance, which remains £20,000 into a cash ISA if you want it. As of early July 2026, Moneyfacts shows:

• Best 1-year fixed cash ISA: 4.70% AER (AlRayan Bank via Meteor Savings)
• Best 3-year fixed cash ISA: 4.66% AER (Aldermore)
• Best 5-year fixed cash ISA: 4.66% AER (Hodge Bank)
• Best easy-access cash ISA: 4.63% AER (Trading 212, including a 12-month bonus)

Checklist: making the most of this year's allowance

1. Check what you've already used of your £20,000 allowance this tax year across all ISA types.
2. Compare fixed vs easy-access — fix if you're confident you won't need the cash; easy-access if you might.
3. Use a comparison tool like Moneyfacts or Which? rather than defaulting to your everyday bank's rate, which is often uncompetitive.
4. Watch for bonus rates that expire — some easy-access deals include a 12-month bonus that drops away, so set a reminder to review after a year.
5. If you're under 65, think ahead to 2027 — if you plan to hold more than £12,000 in cash ISAs long-term, consider whether some of that belongs in a stocks and shares ISA instead, given the coming cap.
6. Don't forget Premium Bonds or fixed-rate bonds as alternatives if you've maxed out your ISA allowance — interest outside an ISA is still tax-free up to your Personal Savings Allowance.

International comparison

The UK's tax-free ISA model has no direct US equivalent — Americans instead use tax-advantaged accounts like Roth IRAs, which are retirement-focused with contribution limits and withdrawal rules, rather than a general-purpose tax-free savings wrapper. Canada's Tax-Free Savings Account is structurally closer to the UK's ISA.

Key Numbers

• £20,000 — total ISA allowance for 2026/27
• £12,000 — new cash ISA-specific limit for under-65s from April 2027
• 4.70% AER — best fixed cash ISA rate currently available
• 22% — new charge on interest from uninvested cash in stocks and shares ISAs from 2027

Sources

• Fidelity: How ISAs could change in 2027
• gov.uk: ISA reform 2027 anti-circumvention rules factsheet
• Moneyfacts: Highest Cash ISA rates
• Which?: Best cash ISA rates 2026

Educational content only — not financial advice.