How much could your cash ISA save you in tax?

Official data reveals ISAs will collectively save us an estimated £6.7 billion in tax this year. We’ve crunched the numbers to find out how much a cash ISA could save you

Decreasing tax; Wooden blocks with "TAX" text of concept
(Image credit: Seiya Tabuchi)

Cash ISAs have brought cheers to many savers this year, with soaring rates reaching above 5%, and more recently, inflation-beating rates.

High interest rates mean more people are paying tax on their interest on traditional savings accounts, but this isn’t the case for ISA holders, who can protect up to £20,000 of their cash from the taxman each tax year. 

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Swipe to scroll horizontally
Tax bandAnnual tax on 5.27% interest from a normal savings account
Basic-rate taxpayers (20%)£210.80
Higher-rate taxpayers (40%)£421.60
Additional-rate taxpayers (45%)£474.30
Swipe to scroll horizontally
Tax bandHow much tax you payTax-free personal savings allowance
Basic-rate taxpayers20%£1,000
Higher-rate taxpayers40%£500
Additional-rate taxpayers45%No allowance

Vaishali has a background in personal finance and a passion for helping people manage their finances. As a former staff writer for MoneyWeek, Vaishali covered the latest news, trends and insights on property, savings and ISAs.

She also has bylines for the U.S. personal finance site Kiplinger.com and Ideal Home, GoodTo, inews, The Week and the Leicester Mercury.