Answers · UK 2025/26
Should I use a Cash ISA or a fixed-term savings account?
Cash ISA: tax-free interest, FSCS £85k protected, fully accessible. Fixed savings (non-ISA): often 0.1-0.3% higher AER, but interest counts toward Personal Savings Allowance. For higher-rate taxpayers ISA usually wins.
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UK Cash ISA vs non-ISA fixed savings 2025/26. Rates April 2025: easy access ISA 4.0-4.8%; fixed 1-2yr ISA 4.2-4.7%; non-ISA easy 3.8-4.9%; non-ISA fixed 1-2yr 4.3-5.0%. Non-ISA can pay slightly more, but interest uses PSA (£1,000 basic / £500 higher / £0 additional). Decision: basic-rate with under ~£25k savings can use non-ISA cheaply; higher/additional-rate ISA almost always wins. ISA compounds tax-free forever — even modest savers benefit long-term. Flexible ISAs: most allow withdrawal + re-deposit within same tax year without affecting allowance. Build emergency fund in easy-access Cash ISA; lump sums 1-3 years away in fixed Cash ISA; above £20k allowance, supplement with non-ISA.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.