ISAs have been in the spotlight more than usual during this year’s ISA season, largely due to this tax year being the last individuals can have a Cash ISA limit of £20,000 before it changes to £12,000 from 6 April 2027 for those under the age of 65. The £20,000 limit will stay in place for those aged 65 and over.
So, it’s natural to question: where do Cash ISAs fit within today’s savings landscape?
Cash ISAs in context
While change is coming, the current picture shows Cash ISAs continue to play a significant role offering tax-free savings.
Cash ISAs remain widely used across the UK:
• Around 66% of ISA subscriptions were held in Cash ISAs in 2023–24
• Approximately 14.4 million people hold a Cash ISA and no other ISA
• Cash ISA subscriptions increased by 67% in 2024, reflecting higher interest rate environments.
Source: HMRC (full source details can be found at the end of the blog)
While things may change over time, Cash ISAs are still a big part of how people save.
Five benefits of a Cash ISA in 2026
Here are five widely recognised benefits of a Cash ISA.
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Tax-free savings
Interest earned in a Cash ISA is tax-free. This means you don’t pay income tax on the interest. For the current tax year 2026/2027 you can save up to £20,000 across all ISA types, and this interest doesn’t count toward your Personal Savings Allowance (PSA).
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It doesn’t use your Personal Savings Allowance
Money in a Cash ISA sits outside your Personal Savings Allowance (PSA). This is one of the key differences when looking at the benefits of a Cash ISA vs savings account. The HMRC sets the PSA at £1,000 for basic rate taxpayers, £500 for higher rate taxpayers and £0 for additional rate taxpayers. As current savings rates have increased in recent years, some people may go over these limits. A Cash ISA is often mentioned when people talk about tax free savings and tax efficiency.
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You get an ISA allowance every year
The current ISA allowance is £20,000 per tax year which can be spread across multiple ISAs. The allowance resets every tax year (6 April). You can split it across different ISAs. If you don’t use it, it doesn’t roll over. There are plans to lower the Cash ISA allowance to £12,000 for the 2027/2028 tax year. HMRC data also shows most people don’t use the full allowance. Around 41.9% of savers put in between £1 and £2,499, while higher earners are more likely to use the full amount.
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You can track the growth of your money
Cash ISAs are different from investment ISAs as the balance doesn’t change with the stock market as the interest rate is set by the provider. This stability proves popular for savers, with the the Financial Conduct Authority (FCA) Financial Lives Survey 2024 finding 61% of people with over £10,000 in savings hold most or all of it in cash. It’s important to be aware some savings accounts can lose value over time due to inflation.
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They’re still widely used
Cash ISAs have been around for more than 25 years and are still the most common type of ISA used by savers in the UK according to research from Royal London, with around twice as many people holding a Cash ISA compared to a Stocks & Shares ISA, which Royal London suggested could be linked to confidence and understanding of investment products
Benefits of a Cash ISA vs savings account
If you’re considering opening a Cash ISA, it may be helpful to compare the differences between a standard savings account and a Cash ISA.
| Feature | Cash ISA | Standard savings account |
| Tax on interest | Interest is tax-free within a Cash ISA | Taxed above the PSA |
| Impact on Personal Savings Allowance (PSA) | PSA not applicable | PSA limits apply |
| Tax efficiency | Interest is tax-free | Will depend on individual circumstances and tax band |
| Access | Varies by product (check account terms) | Typically flexible but will vary depending on account |
What are the disadvantages of a Cash ISA?
We’ve discussed the benefits of a Cash ISA, but for balance, there are some other points to be aware of:
- Rates may be lower than some standard savings accounts
- Fixed-term ISAs may limit access
- Cash savings can be affected by inflation over time
- They don’t offer the same growth potential as investments.
So, is a Cash ISA worth it for 2026/27?
ISAs are still used as a core tool for everyday savers. Cash ISAs continue to be widely used, especially where people want a simple way to hold tax free savings.
At the same time, especially in light of the upcoming Cash ISA limit changing in 2027/2028 tax year, there’s more focus across the industry on helping people understand different options, including investing.
Like all savings accounts, it will depend on how someone wants to save.
What the data shows is Cash ISAs continue to be used by millions of people and are often part of how people think about tax efficiency and managing their savings alongside the PSA.
FAQs
Cash ISAs can sometimes offer lower interest rates compared to non-ISA savings accounts. They also come with annual contribution limits and if you don’t use your full allowance, you can’t carry it forward.
ISAs still offer a tax-free savings wrapper, which can help protect returns from savings income tax.
It can be worth having a Cash ISA if you want tax-free savings income to protect interest from income tax.
A Cash ISA allows savings to grow tax-free, meaning interest isn’t subject to income tax. It could be a useful way to maximise the value of savings within your ISA allowance, especially alongside the discussion of the 2027/2028 ISA cap.
Explore our savings options
Whether you’re looking for flexibility or a fixed return, you can explore our savings range.
Sources
HRMC: Around 66% of ISA subscriptions were held in Cash ISAs in 2023–24
HRMC: Approximately 14.4 million people hold a Cash ISA and no other ISA
HRMC: Cash ISA subscriptions increased by 67% in 2024, reflecting higher interest rate environments.
Financial Lives 2024: PDF Key findings from the FCA’s Financial Lives May 2024 survey
Royal London: More than half of UK Cash ISA savers could be persuaded to move funds to a Stocks and Shares ISA – Royal London
Gov.UK: Commentary for Annual savings statistics: September 2025 – GOV.UK
This article is correct at the time of publishing and for general information purposes only.
We recommend you speak to a professional financial adviser for financial advice. You can find a financial adviser and further personal finance information at unbiased.co.uk.