Moving your ISA to a regular savings account should generally be avoided because withdrawing the funds removes their tax-efficient status, potentially losing that portion of your allowance forever. Instead, use a formal ISA transfer process to move funds to a higher-interest cash ISA or another ISA type to keep it tax-free.
Cash ISAs are tax-free. You won't pay tax on any interest you earn. At NatWest, we offer an instant access Cash ISA, and a Fixed Rate ISA with a set term. On the other hand, the interest you make on normal savings accounts may be taxed, if it's more than your Personal Savings Allowance.
Transferring your ISA directly to another keeps it tax-free and doesn't affect your annual ISA allowance. If you were to put it in an account that isn't an ISA, you'd pay tax on your interest. You can transfer between different Virgin Money ISAs or move an ISA from another provider to us.
Transfers from a Lifetime ISA (LISA):
If transferred to an ISA that is not a LISA, it will be treated as a chargeable withdrawal unless the individual has reached age 60 or they are suffering from a terminal illness. A tax charge of 25% of the amount transferred will be applied.
Stocks and shares ISAs, and investment ISAs, allow you to have access to your money at any time. Investing may be more appropriate if you're looking to invest for the medium-long term, which would be 5 to 10 years.
Disadvantages: Interest rates may decrease, funds might be locked in fixed-rate ISAs, and not all accounts permit transfers, sometimes incurring exit fees.
You may want to transfer an ISA to: Get a better rate with a different Cash ISA product. Change to a different type of ISA. Combine lots of old Cash ISAs into one to make it easier to manage.
The UK government has announced significant changes to the tax treatment of cash held within stocks and shares Isas, targeting a loophole that could allow savers to bypass newly imposed caps on tax-free cash savings.
You don't need to pay tax when withdrawing money from an ISA. Withdrawals from an ISA do not count as taxable income. Any interest you earn within an ISA will remain tax-free, as long as you have never exceeded your annual deposit allowance.
You will have 2 options
You can: reinvest in a new Fixed Rate Cash ISA. withdraw all your money and close your ISA.
You will also get a unique account number for each of your ISA products. So you can choose which ISA to deposit your savings into. For example, you could pay part into a fixed rate ISA, for a guaranteed savings rate, and part into a limited access ISA, so you can dip into your savings if you need to.
Once your ISA is transferred, you'll start earning the rate of interest on the new ISA account from the day of transfer. This means you won't lose any interest during the transfer process.
For short-term goals such as an emergency fund or a holiday, ISAs and savings accounts can still be a good place to save up. For long-term savings such as retirement, however, you should consider investing to help your money grow over time.
You can get around 7% interest on savings in the UK primarily through Regular Saver accounts, with top offers from Zopa (7.1% variable), First Direct (7% fixed), and the Co-operative Bank (7% variable), though these often require you to have their current account and limit monthly deposits, while Principality Building Society has offered rates near this (7.5%) on fixed-term savers, so check MoneySavingExpert and MoneyWeek for current deals.
Money market funds typically offer higher interest rates than regular savings accounts, helping your money grow faster.
The main difference is that a cash ISA is a tax-efficient way to save money. Interest on your savings is paid free from UK income tax and capital gains tax. While both could help your money grow, choosing the right one (or a combination of both) for your circumstances can help maximise your money's growth potential.
While fixed ISAs are less reactive to changes to the base rate, providers still often consider market forecasts when setting their pricing. This has seen the average one-year fixed ISA rate fall by 0.18 percentage points between November 2024 and 2025 to pay 3.89%.
There's no limit to how much money can be in an ISA. The ISA allowance limit applies to how much you can pay in during each tax year (6 April to 5 April the following year).
Transferring from one ISA to another ISA ensures you maintain ISA tax-free status benefits. If you withdraw money from an ISA before placing it into another ISA, the money will lose its tax-free status, meaning that you reduce how much you can pay into an ISA during the tax year.
If you complete a tax return, you do not need to declare any ISA interest, income or capital gains on it.
If you're not paying tax on your savings interest, cash ISAs have no benefit – so many should ditch them for higher-paying standard accounts. That's the message from MoneySavingExpert.com founder Martin Lewis in the third episode of the latest series of ITV's The Martin Lewis Money Show Live.
Even when you see a lower number when you check your balance, try not to think of dips in the market as “losing” money. You only “lose” money if you withdraw from your ISA at a time when your ISA is worth less than you've paid in.
There are a number of factors you should consider before selecting a cash ISA.