Grow your savings tax-free in a Cash ISA 

With a fixed term Cash ISA, you lock your money away for a certain number of years in return for a steady, guaranteed interest rate. You usually have to deposit your money within a certain timeframe - with Zopa, that’sthe first 30 days of opening your ISA.  If you want to withdraw money from your fixed term ISA before the term ends, you will be charged a penalty.  

Easy access Cash ISAs have a variable interest rate, so how much your money grows could change each month. With easy access ISAs, you can pay in money and take it out whenever you like with no penalty.  

Fixed term ISAs typically offer a higher interest rate than easy access ISAs, so you could end up earning more interest overall.  

When you come to the end of your term, your Fixed Term ISA pot will move into an Access ISA pot and you’re free to withdraw your money, put it in another pot, or keep it where it is. 

With Zopa, you can withdraw money from your fixed term ISA, but you’ll have to pay a penalty. You should only deposit money you feel comfortable locking away for your chosen term. 

Tax-free, or tax-efficient, refers to when you don’t pay any income tax on the interest you earn from your savings. ISAs are tax-free, while interest on other savings accounts is typically eligible for tax. This means ISAstypically let you keep more of the interest you earn on your savings compared to non-ISA savings accounts. Remember that tax treatment depends on your individual circumstances and could change. 

The personal savings allowance, or PSA, is set by the government and gives all taxpayers a tax-free savings allowance. If you're a basic rate taxpayer, you can earn up to £1,000 in interest per year tax-free. Higher earners can earn up to £500 per year.    

The ISA allowance for 6 April 2025 to 5 April 2026 is £20,000. That’s the most you can pay into your ISAs within one tax year and doesn’t include the interest you earn. The allowance is smaller for lifetime ISAs (£4,000) and junior ISAs (£9,000). Junior ISAs don’t count as part of your £20,000 allowance, but lifetime ISAs do.  
 
You can split your allowance across different types of ISA anyway you like, as long as you don’t go over the £20,000 limit. For example, you might pay £5,000 into a Cash ISA, £11,000 into a stocks and shares ISA, and £4,000 into a lifetime ISA.  

A Cash ISA works in the same way as a normal savings account - the only difference is that you won’t pay tax on the interest you earn. There are different types of Cash ISA, with easy access and fixed term the most common. Easy access Cash ISAs let you add and withdraw money anytime with no penalty, while fixed term Cash ISAs normally come with more restrictions.  
 
Like with regular savings accounts, your money is protected in a Cash ISA up to £120,000 by the Financial Services Regulation Scheme (FSCS).   
 
You can choose to pay your annual ISA allowance into a single ISA, or split it across different types. You can open more than one of the same type of ISA, but it usually has to be with different providers. For example, you could open a Cash ISA with Zopa as well as a Cash ISA with another bank.