A Cash ISA (Individual Savings Account) is a simple, low-risk way to save money tax-free in the UK. Any interest earned in a Cash ISA is not subject to income tax, making it an efficient option for growing your savings.
Whether you’re new to ISAs or reviewing your accounts, this guide explains how Cash ISAs work in 2026, the allowance, and strategies to make the most of your tax-free savings.
A Cash ISA is a type of savings account that allows your money to grow tax-free. Unlike regular savings accounts, you won’t pay income tax on the interest you earn, which can help your savings grow faster over time.
For context, the Personal Savings Allowance in 2026 is:
Using a Cash ISA can help you avoid these limits and ensure all interest remains tax-free.
Cash ISAs function like standard savings accounts, but with added tax advantages. Key features include:
Cash ISAs may differ in flexibility:
*With Aldermore Notice ISAs, customers can also access their funds instantly and pay an interest charge for doing so (rather than giving notice).
Choosing the right account depends on your savings goals and access needs.
All Aldermore Cash ISAs are flexible; this means that any money withdrawn can be replaced in the same tax year without impacting your ISA allowance. You can withdraw and replace with all our current issue Cash ISAs; however, you might suffer withdrawal penalties for doing so.
The ISA allowance for the 2026/27 tax year is £20,000. You can place the full allowance into a Cash ISA, or divide it between different ISA types such as Cash ISAs, Stocks & Shares ISAs, Lifetime ISAs, and Innovative Finance ISAs.
Any unused allowance does not carry forward, so planning how much to save and which account types to use can help you maximise your tax-free growth.
Yes. You can hold multiple Cash ISAs in a single tax year, as long as your total contributions remain within the £20,000 allowance. This allows you to:
No. Transferring money from one Cash ISA to another does not reduce your annual ISA allowance.
For example:
This makes transfers a powerful tool for maximising your tax-free interest.
Read more: How to transfer a Cash ISA.
Interest is calculated much like a standard savings account:
Regular deposits and minimising withdrawals can help maximise your tax-free interest.
Cash ISAs are particularly suitable if you want:
They are flexible for both short- and medium-term savings goals and complement other savings or investment strategies.
Aldermore offers a variety of Cash ISAs to suit different savings strategies and goals:
With the right account, you can align your ISA with both short- and long-term savings plans, helping your money grow efficiently while remaining tax-free.