Cash ISA Growth Calculator (UK — 2026/27 Rates)

A UK Cash ISA is the safer cousin to the Stocks & Shares ISA. The 2026/27 allowance is £20,000, shared across all ISA types, and every penny of interest earned inside the wrapper is tax-free — no income tax, no Personal Savings Allowance erosion, no HMRC self-assessment line. The trade-off is that Cash ISA returns rarely beat inflation by much. This calculator projects nominal and real growth side-by-side so you can see what your savings will actually be worth in today's purchasing power, and lets you compare directly against the equity-driven Stocks & Shares ISA over horizons of 1-30 years.

What a Cash ISA is — the 2026/27 mechanics

A Cash ISA is essentially a tax-free savings account. You deposit cash, the bank or building society pays interest, and that interest is exempt from UK income tax. Unlike a regular savings account, there is no Personal Savings Allowance to worry about (the £1,000 PSA for basic-rate taxpayers and £500 for higher-rate taxpayers does not apply because the interest is generated inside the ISA wrapper). For an additional-rate taxpayer with no PSA at all, a Cash ISA is materially more valuable per pound of interest than any taxable equivalent.

The 2026/27 mechanics are:

• £20,000 annual contribution allowance, shared across Cash, Stocks & Shares, Innovative Finance and Lifetime ISAs (the LISA is sub-capped at £4,000 within that £20,000)
• Tax-free interest with no annual reporting requirement
• No withdrawal penalty — money can come out any time, though the impact on the ISA wrapper depends on whether the product is a "flexible" Cash ISA or not
• FSCS deposit protection at £85,000 per banking licence per person, mirroring the protection on standard savings accounts
• Multiple Cash ISAs of the same type permitted in the same tax year from 6 April 2024 (one of the headline reforms in the Spring Budget 2024 changes)
• Partial transfers from prior-year subscriptions allowed since the April 2024 reforms, so you no longer have to move an entire historic balance to access better rates with a different provider

The £20,000 allowance is use-it-or-lose-it. It resets at 00:00 on 6 April each year and any unused portion from the prior tax year is gone. Multiple Cash ISAs of the same type are now permitted, but the £20,000 cap is shared across all of them — opening five Cash ISAs with five different providers does not give you £100,000 of allowance, it gives you £20,000 split however you choose across the five.

The 2026 Cash ISA rate landscape

UK Cash ISA rates in 2026 sit close to where they have been since the Bank of England began cutting Bank Rate from its 5.25% peak in August 2024. Bank Rate at the time of writing sits around 4-4.5%, and the MPC's projections in the May 2026 Monetary Policy Report point to a slow glide-path lower through 2027-28. That backdrop drives a fairly tight band of best-buy Cash ISA rates:

• Easy-access Cash ISAs: typically 4.5-5.0% for top-of-market providers (often including a 6-12-month bonus rate that drops afterwards)
• 1-year fixed-rate Cash ISAs: typically 4.7-5.2%, paying the premium for the locked-in commitment
• 2-year fixed-rate Cash ISAs: typically 4.6-5.1%
• 5-year fixed-rate Cash ISAs: typically 4.3-4.8%, with the inverted-curve discount reflecting market expectations of lower base rates ahead

The 5-year fixed-rate sitting below the 1-year fixed-rate is unusual in historical context — most of the time, longer fixes pay a duration premium. The current inversion reflects the SONIA swap curve pricing in further Bank Rate cuts; markets are willing to pay you less per year over five years because they expect the average overnight rate across that period to be lower than today's rate. For underlying market context, the Bank of England's Monthly Money and Credit release tracks weighted-average effective rates on new household deposits, and the FCA's annual Savings Market Review tracks the spread between best-buy and average rates.

A persistent feature of the Cash ISA market is the "loyalty tax" — last year's best-buy fixed-rate easily becomes this year's worst-buy easy-access if you don't refinance at maturity. Best practice is to set a calendar reminder for the day the fix matures and shop the market afresh.

Cash ISA growth maths — the formulas the calculator uses

For a lump-sum deposit growing at a flat annual rate with annual compounding, the standard compound interest formula is:

A = P × (1 + r)n

Where P is the starting principal, r is the annual interest rate as a decimal, and n is the number of years. For monthly compounding (which most UK Cash ISAs use under the hood), the formula adjusts to A = P × (1 + r/12)¹²ⁿ.

Worked example: £20,000 lump sum deposited in a Cash ISA at 4.8% annual interest, held for 10 years with annual compounding, comes to £20,000 × 1.048¹⁰ = £31,962.65. With monthly compounding the result is slightly higher at £32,290.56 because each month's interest itself earns interest. Most calculators (this one included) default to annual compounding for clarity; switch to monthly mentally if your provider's terms specify it.

For regular monthly contributions on top of a starting balance, the calculator uses the future-value-of-an-annuity formula:

FV = P × (1 + r/n)nt + PMT × [((1 + r/n)nt − 1) ÷ (r/n)]

Where P is the starting balance, PMT is the monthly contribution, r is the annual rate, n is the number of compounding periods per year (12 for monthly), and t is time in years. For example, £10,000 starting balance plus £200/month for 10 years at 4.8% gives a nominal terminal balance of approximately £46,872, of which £34,000 is total contributions and £12,872 is tax-free interest.

Real returns — the inflation problem Cash ISAs cannot escape

The single most important number this calculator surfaces is the gap between nominal and real returns. A Cash ISA can comfortably beat the after-tax return on a regular savings account, but it struggles to beat inflation by much. The real return formula is:

Real rate = (1 + nominal) ÷ (1 + inflation) − 1

At a 4.8% nominal Cash ISA rate and 2.5% CPI inflation, the real rate is (1.048 ÷ 1.025) − 1 = 2.24% — meaningfully positive, but a long way below typical equity returns. At 3% inflation it drops to 1.75%; at 4% inflation (where the UK sat for much of 2022-23) it falls to 0.77%. During 2022-23 when CPI peaked at 11.1%, Cash ISA real returns were sharply negative — savers lost roughly 6-7% of real purchasing power in a single year even on best-buy rates.

The 20-year worked example makes the drag concrete:

• £20,000 lump sum at 4.8% nominal over 20 years grows to £51,080.56 in nominal pounds
• Discounted by 2.5% inflation over the same 20-year window, the real value in 2026 purchasing power is £31,172.98
• The £19,907.58 gap between nominal and real is the inflation tax — money you nominally own but cannot spend at 2026 prices

For 30-year horizons the gap widens further. Cash ISA real returns at 1% (a reasonable long-run assumption combining 4% nominal and 3% inflation) generate roughly £699,000 over 30 years on a maximum £1,666.67/month contribution. The equivalent Stocks & Shares ISA at 5% real returns generates roughly £1,387,000 over the same period — roughly twice the Cash ISA terminal balance. Over 40-year horizons that 4-5 percentage point real-return gap compounds to a 3-4x difference in terminal wealth. For longer-term inflation context, the UK inflation impact calculator runs the same real-vs-nominal arithmetic against ONS CPI and RPI data going back to the 1940s.

Cash ISA vs Stocks & Shares ISA — when each makes sense

The decision between Cash and Stocks & Shares ISAs is fundamentally a time-horizon question, not a risk-appetite question. Equity markets carry enough drawdown risk to be inappropriate for short horizons; cash carries enough inflation drag to be inappropriate for long horizons. Within each bucket the choice is essentially mechanical:

• Horizon under 5 years (emergency fund, near-term house deposit, known expense): Cash ISA wins. FSCS-protected, no capital loss risk, 4-5% nominal rate in the current cycle. The inflation drag matters less because the absolute time horizon is short.
• Horizon 5-10 years (mid-term goals, planned career break funding): Grey zone. Either a multi-asset fund inside a Stocks & Shares ISA, a Cash ISA accepting the real-return drag for capital safety, or a mixed allocation of both depending on goal flexibility.
• Horizon over 10 years (retirement saving outside pension, long-term wealth-building): Stocks & Shares ISA wins. Over a 30-year window the equity-vs-cash terminal-wealth gap is roughly 2x; over 40 years it is 3-4x. The deeper-dive sibling calculator at /isa-calculator/stocks-and-shares/ handles the equity projection with the same £20,000 allowance enforced.

The one place where Cash ISA wins beyond 5 years is the house-deposit scenario where the target completion date is fixed and known. A 7-year house-deposit plan benefits from Cash ISA certainty even though the inflation drag is meaningful, because a 30% equity drawdown in year 6 — possible if not likely — would derail the completion date entirely. Sequence-of-returns risk during accumulation matters far less than people think, but for a hard-dated goal it matters absolutely.

Rate-shopping vs convenience — fixed-rate versus easy-access

The Cash ISA market has three structural quirks that reward attention to detail:

First, bonus-rate teasers. Easy-access Cash ISAs frequently quote a headline rate that includes a 6-12 month bonus dropping off afterwards. A 5.20% Cash ISA may consist of a 4.20% underlying rate plus a 1.00% twelve-month bonus. After month 13 you are sitting in a 4.20% account, which by then is usually below the best-buy elsewhere. Always check the underlying rate, not just the headline rate, and treat any product with a non-trivial bonus as a 12-month commitment to refinance.

Second, fixed-rate vs easy-access trade-offs. A 1-year fixed at 5.10% beats an easy-access at 4.50% by 60 basis points of nominal return — £60 on £10,000 over the year. But the fix locks you out of taking the money for 12 months, and the bonus on the easy-access often expires in the same window. Worked break-even: £10,000 in a 5.10% 1-year fixed yields £510 of interest in year one. The same £10,000 in a 5.20%-headline easy-access (with 1.00% bonus for 6 months, 4.20% thereafter) yields approximately £260 over the first 6 months and £210 over the next 6, totalling roughly £470 — the fixed-rate wins by about £40 even before factoring in re-bonus chasing costs.

Third, transfer rules. Once money is in a Cash ISA, moving it to a higher-rate Cash ISA must be done by an ISA transfer (the new provider pulls the balance from the old provider) and not by withdrawal-and-redeposit. Withdrawing money from a non-flexible Cash ISA and re-depositing it counts as a fresh subscription against the current year's £20,000 allowance — potentially burning a chunk of allowance to no benefit. Always use the receiving provider's ISA transfer form; the transfer typically completes in 15 working days for Cash ISAs.

Flexible Cash ISAs (a feature some but not all providers offer) sidestep this. Money withdrawn from a flexible Cash ISA can be replaced in the same tax year without using fresh allowance. The flexibility is voluntary on the provider's side — check the product T&Cs before opening if it matters.

The April 2024 reforms recap

Three changes to UK ISA rules took effect on 6 April 2024 under the Spring Budget 2024 measures:

• Multiple ISAs of the same type allowed. Before April 2024, you could only open and subscribe to one Cash ISA per tax year. From April 2024 onwards, you can open and subscribe to multiple Cash ISAs (different providers, different products) within the same tax year, subject to the combined £20,000 allowance cap.
• Partial transfers from prior-year subscriptions allowed. Previously, current-year Cash ISA subscriptions had to be transferred in full; only prior-year subscriptions could be split. Now both can be partially transferred, giving savers more flexibility to chase best-buy rates without committing the entire balance.
• £20,000 allowance unchanged. The headline allowance figure was retained, not increased. The reforms were structural rather than expansionary.

A proposed fourth change — a separate British ISA (or "GB ISA") adding £5,000 of allowance for UK-listed equities only — was announced in March 2024 but was scrapped by the incoming Chancellor in October 2024 before implementation. The £20,000 combined allowance is the only number that matters for 2026/27 planning.

Calculator inputs and outputs

The calculator takes five inputs: starting Cash ISA balance, monthly contribution (capped at £1,666.67 to enforce the £20,000 annual allowance), annual interest rate, time horizon in years, and an inflation rate for the real-return view. It outputs four figures: final nominal balance, total contributions, interest earned, and the real balance expressed in today's pounds (using the assumed inflation rate). Switching the inflation rate from 2.5% to 3% or 0% lets you stress-test against different CPI paths without changing your provider rate.

For underlying rules, HMRC's ISA Manager Reference Manual on gov.uk is the authoritative reference for current allowances and product mechanics. The FSCS website confirms current depositor protection limits (£85,000 per banking licence per individual). The Bank of England's Money and Credit statistical release tracks weighted-average rates on new household deposits, which is the most authoritative public source for the underlying rate environment.