Cash ISA Calculator 2026: forecast tax-free savings growth

Published: 1 January 2025 | Updated: 20 February 2026 | By Mustafa Bilgic (MB)

The Cash ISA allowance remains £20000 per tax year in 2026, so the core planning question is no longer “will the limit change?” and more “how can I use the same limit better?” This page gives you a practical calculator and an in-depth guide that compares a tax-free Cash ISA against a taxable savings account across 5, 10, and 20 years. It is designed for real life: monthly savers, people with existing balances, and families splitting savings between emergency cash, medium-term goals, and longer-term investing. You can model rates in a few seconds, then use the sections below to understand where easy access, fixed-rate deals, Lifetime ISAs, Junior ISAs, transfers, FSCS limits, and Bed and ISA fit into a complete plan.

For 2026 assumptions, this guide reflects a practical market snapshot many savers are seeing: easy access top rates around 4.5% to 5.0%, 1-year fixed around 4.7%, and 2-year fixed around 4.5%. These rates move during the year, so use the calculator with the exact rate offered by your provider. The objective is simple: protect more of your interest from tax drag and make each year of ISA allowance do more work.

Cash ISA calculator: monthly savings vs taxable account

Enter your monthly savings amount, expected Cash ISA rate, and a comparable taxable savings rate. The tool calculates projected values at 5, 10, and 20 years. It applies the £20000 annual ISA contribution cap and compares this with a taxable account using your selected tax band assumptions. In the taxable side, interest above the Personal Savings Allowance is reduced by income tax each year, which is the drag this page helps you visualise.

Model notes: monthly compounding is used. Tax is estimated annually on taxable interest above the Personal Savings Allowance selected in the tax-band field. Real products can differ in payout frequency and tax treatment details.

2026 UK ISA rate snapshot and account choices

In 2026, savers are usually comparing flexibility against certainty. Easy access Cash ISAs are attractive when you want liquidity and rate optionality, while fixed terms can still suit money you know you will not need before maturity. What matters is not only the headline rate but whether it fits your timeline. Emergency funds generally need instant access. House deposit money with a clear 12 to 24 month window often fits fixed products if you can tolerate reduced access. Long-term money may need a wider conversation that includes Stocks and Shares ISAs.

Even small rate differences compound into large money over time. A 0.3% spread may look trivial on day one, but over a decade of regular monthly contributions, the effect can become meaningful, especially when tax-free compounding is preserved. This is why your process should be: choose account type first by access need, then compare rates within that account type, then run the calculator so you can see the impact in pounds.

Cash ISA allowance in 2026: £20000/year and still highly valuable

The annual Cash ISA allowance remains £20000, unchanged for 2026. Because the limit has not increased, savers who already fill their ISA each year are effectively managing a scarce tax shelter. That makes timing and account structure more important than chasing only promotional rates. If your monthly savings are below £1666.67, you can usually drip-feed and stay within the annual cap naturally. If you save more than this amount, your ISA contribution will cap before year-end, so it is sensible to pre-plan where excess monthly cash goes next, such as taxable savings, pensions, mortgage overpayments, or staged transfers into other wrappers where appropriate.

Many people underestimate how quickly taxable interest becomes a drag once balances rise. The allowance staying at £20000 means the best time to use it is as early in the tax year as practical for your cash flow, because tax-free growth starts immediately. If you already hold old ISAs, transfers can help consolidate and improve rates without using new allowance. If you hold large taxable cash balances, moving as much as possible into ISA wrappers each year is usually a straightforward efficiency gain, particularly for higher and additional-rate taxpayers who have smaller or no Personal Savings Allowance in taxable accounts.

Lifetime ISA (LISA): £4000 annual limit and 25% government bonus

The Lifetime ISA offers a different value proposition from a standard Cash ISA. You can contribute up to £4000 per year, and the government adds a 25% bonus, which means up to £1000 bonus each year if you contribute the full amount. That bonus is substantial and is one of the few places where savers get an immediate uplift that is difficult to replicate elsewhere without taking much higher risk. The LISA is mainly built for two goals: buying a first home (subject to eligibility rules) or retirement savings from age 60.

The key planning point is that LISA contributions count within your overall ISA framework, so you should integrate it with your broader allowance strategy rather than treat it as a separate silo. If you are eligible and your goal matches the rules, it can be rational to prioritise LISA funding before extra standard Cash ISA amounts. If your goal does not match the permitted withdrawal routes, the penalty on unqualified withdrawals can remove much of the benefit, so read product terms carefully. In short: LISA is powerful when used exactly as intended, less attractive when used as general-purpose cash savings.

Cash ISA versus Stocks and Shares ISA: how to compare properly

Cash ISAs protect capital value in nominal terms and are usually preferred for short horizons, emergency reserves, and money that must be there on a specific date. Stocks and Shares ISAs introduce market risk but may offer higher expected long-run growth, which matters for goals measured in decades rather than months. The right comparison is not “which one has the bigger number this quarter,” but “which wrapper matches the time horizon, risk tolerance, and need for certainty of this specific pot of money.”

For a house deposit needed soon, a Cash ISA often remains more suitable because volatility can arrive at the wrong time in investment markets. For retirement money twenty years away, a Stocks and Shares ISA can be reasonable for many savers because compounding and reinvestment horizons are longer, though there are no guaranteed returns. A useful workflow is to split by purpose: cash-like goals in Cash ISA, long-horizon goals potentially in investment ISA, and then rebalance annually as your plans evolve. This page’s calculator focuses on cash growth and tax efficiency; it is not a return forecast for equities or funds.

If you already have taxable investments outside an ISA, you can still improve long-term tax efficiency by gradually moving assets into an ISA wrapper through annual allowances. That is where Bed and ISA becomes useful, and it is one of the most practical tactics for reducing future tax friction without changing your core investment strategy. The wrapper decision is often as important as the asset decision over multi-year horizons.

Junior ISA (JISA): £9000 annual allowance for children

For families, the Junior ISA annual contribution limit is £9000 per child. A JISA can be a disciplined way to build long-term savings for education, early adulthood costs, or a future financial buffer. Parents and relatives can contribute, and growth is sheltered in the child’s ISA wrapper. As with adult ISAs, selecting cash versus investments should depend on timescale and risk tolerance. For shorter horizons, a cash JISA can be simpler. For longer horizons, an investment JISA may be considered, acknowledging market volatility.

Family planning works best when allowances are mapped in a single annual plan: adult ISA usage, LISA priority where relevant, and JISA funding where affordable. This prevents a common issue where cash sits in taxable accounts while available wrappers go partly unused. If your household can only fund one thing at a time, start with the goal that has the highest consequence of underfunding, then build from there. The point is coherence, not complexity.

ISA transfer rules: move providers without losing allowance

A major advantage of UK ISA rules is that you can usually transfer ISAs to another provider without losing tax-free status, and without counting transferred funds again against the current tax-year allowance. In practical terms: if your current provider lags market rates, you are not trapped. The critical step is to use the receiving provider’s official ISA transfer process rather than withdrawing funds manually to your bank and redepositing. Manual withdrawal can break wrapper continuity and create avoidable allowance problems.

Many savers now review providers at least once per year, especially when fixed terms mature or easy-access rates diverge materially. Transfer timing can improve outcomes materially over longer periods, particularly for large balances where small rate gaps compound into bigger differences. For current-year contributions, always confirm whether your chosen provider accepts full or partial transfers under its terms. The broad principle remains straightforward: transfer through the formal ISA route and you can generally move any time without sacrificing allowance benefits.

FSCS protection: understand the £85000 institution limit

Cash ISA balances are generally covered by FSCS protection up to £85000 per person, per authorised institution. The most important phrase is “authorised institution.” Multiple brands may share one banking licence, so spreading money across brand names is not enough if they are under the same underlying institution. If you hold large cash balances, check licence grouping and diversify accordingly.

This is operational risk management, not rate chasing. A saver with £170000 cash might decide to split equally across two separate authorised institutions to keep each side within FSCS coverage. The calculator on this page focuses on growth; your real-world setup should also include protection hygiene so that safety and return are considered together. A good savings plan combines wrapper efficiency, competitive rates, and institutional diversification.

Bed and ISA strategy for taxable investments

Bed and ISA is a process where taxable investments are sold and repurchased inside an ISA wrapper, using your annual ISA allowance. The mechanics vary by platform, but the objective is consistent: gradually move assets from taxable space into tax-sheltered space to reduce future capital gains and dividend tax exposure. For investors with long-term holdings outside an ISA, this can be one of the highest-impact administrative upgrades available because it improves tax efficiency year after year without necessarily changing the underlying portfolio design.

Execution needs care. Sales can crystallise gains, so timing around annual CGT planning matters. Costs, spreads, and dealing fees should be reviewed to avoid paying away the tax benefit through poor execution. Many investors use a staged approach each tax year, prioritising holdings where tax drag or complexity is highest. Over time, the portfolio inside wrappers grows while taxable friction falls. Even if you cannot move everything at once, recurring annual transfers can materially simplify future tax management.

For savers who are mostly cash-focused today but expect to invest later, understanding Bed and ISA now still helps. It clarifies why using ISA allowances consistently each year is valuable even before balances are large. A wrapper-first mindset keeps optionality open: you can hold cash in an ISA now and adapt product selection later while keeping the shelter.

Worked examples: what 5, 10, and 20 years can look like

Example A: suppose you save £500 per month, start with £10000, and earn 4.8% in both accounts. For a basic-rate taxpayer, early years may look similar because the Personal Savings Allowance offsets part of taxable interest. Over longer horizons, taxable interest can exceed PSA more regularly, and the gap typically widens in favour of the ISA. At 20 years, the difference can become substantial because tax drag compounds, while ISA growth remains fully sheltered.

Example B: increase savings to £1500 per month. You remain below the ISA annual cap, so all monthly contributions continue entering the ISA. Now the gross pounds at work are larger, and so is the value of protection from tax drag. Higher-rate taxpayers tend to see differences emerge sooner than basic-rate taxpayers because the taxable side has a smaller PSA and higher tax rate on excess interest. The larger and longer your balances, the more wrapper efficiency tends to matter.

Example C: set monthly savings above £1666.67. The ISA side caps at £20000 annual contributions, while taxable savings can continue receiving unlimited deposits in this model. The tool warns you when this cap is reached. This scenario is useful for high savers because it shows not just “ISA vs taxable” but also where excess cash accumulates after ISA capacity is used. From there, you can decide whether to use other wrappers, stagger fixed maturities, overpay debt, or keep liquidity based on your personal priorities.

Methodology and practical use notes

This calculator is intentionally transparent rather than overly complex. It uses monthly contributions, monthly compounding, a fixed annual rate for each side, and annual tax adjustment for the taxable account based on a simple tax-band model. It does not include every edge-case product feature such as variable bonus rates, withdrawal penalties beyond fixed-account rules, stepped rates, or changing tax legislation during the horizon. The objective is clarity: produce a useful directional estimate quickly so you can make better account-structure decisions.

To get the most useful result, run three scenarios each time you review your savings plan. First, a base case with your current provider rates. Second, a “best available” case using competitive market rates. Third, a conservative case with lower future rates. If all three still show a consistent strategy, your plan is robust. If outcomes diverge widely, focus on flexibility and review frequency rather than committing too early to long lock-ins.

Finally, remember sequence: set goals, define liquidity buckets, use wrappers efficiently, then optimise rates. Many savers reverse that order and end up with money in the wrong place. A high rate in the wrong account type is often less helpful than a slightly lower rate in the right structure for your actual timeline.

Frequently asked questions