Cash ISAs

A Cash ISA is a savings account that you don't pay any tax on. If you're 18 or over, you're given an individual savings account (ISA) allowance at the start of each tax year. Currently, that's £20,000. So, with a Cash ISA, you can save up to that amount each tax year and you'll pay no tax on the interest you earn.

Like other savings accounts, there are two main types of Cash ISAs. You can get ones offering easy access to your money or fixed rate options that offer a guaranteed interest rate for the year. It's important to choose the right type of Cash ISA for you.

So, how exactly does a Cash ISA work?

Cash ISAs are a simple form of savings account, with two main types available:

• Fixed Rate Cash ISAs: These give you a guaranteed interest rate for the duration of the ISA (from 1-5 years). You'll get a higher interest rate than with a variable Cash ISA, but you'll lose out on interest if you need to make a withdrawal.
• Variable rate Cash ISAs: These offer a lower interest than fixed rate isa accounts, but this can go up or down. However, you'll have easier access to your money, with many variable Cash ISAs offering unlimited withdrawals with no interest penalty attached.

It's a good idea to do a Cash ISA comparison to find out which option might work better for you.

As well as the different Cash ISA interest rates available, there are a few other key things to know about opening an account:

• You'll earn tax-free interest on your savings and you can add up to £20,000 a year.
• Cash ISAs stay tax-free every single year.
• Your Cash ISA allowance resets every year on 6 April.
• You may only subscribe to one Cash ISA in a single tax year with Leeds Building Society. In any such year, and if you are aged 18 or over, other providers may also allow you to invest in a Cash ISA, Stocks and Shares ISA, Innovative Finance ISA and/or Lifetime ISA, subject to the overall ISA limits.
• A maximum of £85,000 of your savings per building society, bank or credit union is protected under the Financial Services Compensation Scheme (FSCS). This protection extends to Cash ISAs.

Your Cash ISA allowance for each tax year is £20,000, so that's the maximum you can invest tax-free in a Cash ISA during that time.

Your allowance will start again at the beginning of the new tax year, allowing you to invest up to £20,000 tax-free the following year. Any leftover allowance won't be carried over to the next tax year.

It is possible to have multiple Cash ISAs but there are a few rules:

• You may only subscribe to one Cash ISA in a single tax year with Leeds Building Society. In any such year, and if you are aged 18 or over, other providers may also allow you to invest in a Cash ISA, Stocks and Shares ISA, Innovative Finance ISA and/or Lifetime ISA, subject to the overall ISA limits.
• You can only benefit from tax-free savings up to £20,000 per tax year.

If you exceed your overall ISA limits in the same tax year by mistake, you'll need to contact HMRC.

Essentially, yes, Cash ISAs are tax-free, meaning that you can save up to your allowance (£20,000 per tax year) without paying tax. This is providing that you follow the rules of your individual Cash ISA account.

Yes, you can transfer your Cash ISA to a different provider whenever you want, but if you've paid into your Cash ISA account in the current tax year, you must transfer all of your savings. 

For savings from previous tax years, you can decide whether to transfer all or part of the balance.