Cash ISA
A savings account where interest is tax-free, sitting within the £20,000 ISA allowance.
A cash ISA pays interest free of UK income tax, with the deposit covered by the Financial Services Compensation Scheme up to £85,000 per banking licence. The £20,000 annual allowance is shared with stocks and shares, Lifetime, and Innovative Finance ISAs. From April 2024 you can pay into multiple cash ISAs of the same type in a single tax year, a change to the old single-provider rule. Fixed-rate cash ISAs lock the money for a set term; easy-access ones let you withdraw freely. Useful for higher-rate taxpayers who have already used their personal savings allowance.
A 60-second lesson that puts this term in context, alongside the others, lives inside the Finlo app.