Everything you need to know about a fixed rate ISA

With a fixed rate cash ISA, you lock away your savings for a set period of time in return for a fixed interest rate. As with other types of ISA, interest earned is tax-free. This article outlines how fixed rate ISAs work, what to watch for (such as top-up and withdrawal rules and ISA allowance limits), and how to compare them with alternatives such as fixed rate bonds.

Updated: 25 March 2026

The current annual ISA allowance is £20,000 and will remain the same until the 2027/28 tax year. 

The government has confirmed changes affecting cash ISAs from 6 April 2027, which will see contributions capped at £12,000 for those under 65 years of age. The overall ISA limit will remain at £20,000.

You can also consider other products such as fixed-term deposits to help maximise savings. With Raisin UK, you can lock money away for a set term and earn a fixed interest rate of up to 4.50% AER.

A fixed rate ISA is a tax-free savings account that allows you to lock away a lump sum of money for a set period in exchange for a fixed interest rate. The rate is agreed in advance and remains the same for the duration of the term.

Key features of a fixed rate ISA include:

• Fixed rates: The interest rate is agreed in advance and won’t change during the term. 

• Set periods: High-street banks typically offer fixed terms of one and two years, but you can also find providers offering three-year and five-year fixed term ISAs

• Annual limits: You can save and invest up to £20,000 across all your ISAs

• Minimum deposits: There is usually a requirement to deposit between £1 and £1,000 to open the ISA

• Tax-free interest: The interest on a fixed rate ISA isn’t subject to income tax like it can be on other savings 

• Withdrawal restrictions: You usually can’t touch your money until the term ends without facing penalties that could result in you getting back less than you deposited

• Account opening conditions: You normally need to be a UK resident and at least 18 years old. You’ll need to provide your National Insurance number

Some banks and building societies employ the term 'fixed rate cash ISA', which is the same as a fixed rate ISA and simply clarifies that it’s a type of cash ISA. Under the cash ISA umbrella, there are easy access cash ISAs, regular savings ISAs, and junior ISAs. The word 'cash' indicates that savings are held in cash, not invested in the stock market.

To open a fixed rate cash ISA, some providers require you to make a minimum deposit, which can range from £1 to around £1,000. Most providers require you to make a lump‑sum deposit shortly after opening the account (often within 14‑30 days) and won’t allow additional top‑ups during the term.

Deposits across all ISAs you hold must stay within the £20,000 annual allowance per tax year. It may be possible to transfer funds from one ISA into a new fixed rate ISA without this counting towards the annual limit – as long as the transfer is completed via the official process. Not all providers accept transfers from existing ISAs, so it’s important to check this before opening an account.

While fixed rate ISAs typically offer better interest rates than other cash ISAs, the compromise is that you can’t access your money until the end of the agreed term. If you do need to withdraw funds before the account matures, you might have to close the account or pay back some of the interest as a penalty.

When deciding on a fixed rate ISA, here are some considerations:

• Term: Fixed rate ISA terms typically range between one and five years, but it’s not always the case that longer terms equal higher interest rates. Review account options to find the most favourable interest rate and a term that suits you and your goals. 

• Budget: Locking funds in a fixed rate ISA means that money isn’t available for day-to-day spending while the account is active. You might reflect on your budget to see what you can realistically set aside.

• Interest rates: Interest is fixed for the term, regardless of wider market rate changes. This means that the rate on your account stays the same, even if other savings rates go up or down. Find out how savings rates are linked to the Bank of England base rate and wider economic factor.

More flexible options can include instant access ISAs and easy access savings accounts that let you withdraw money when needed, but they might offer slightly lower interest rates. Fixed rate ISAs are one of several ISA types. Depending on your goals, you could explore:

• Flexible ISAs
• Stocks and shares ISAs
• Innovative finance ISAs
• Lifetime ISAs

Fixed rate bonds operate similarly to fixed rate ISAs, offering a fixed interest rate if you lock your money away for an agreed term. The main difference is that the interest earned in a fixed ISA is tax-free, regardless of your income. Interest on fixed rate bonds might be taxable if it is more than your personal savings allowance.

You can read more in our comparison of ISAs and fixed rate bonds – see the main differences in this table:

You can open more than one fixed rate cash ISA in the same tax year (6 April – 5 April) as long as the total you pay across all of your ISAs doesn’t exceed the annual allowance of £20,000. This was a change introduced in April 2024. Previously, savers could only pay into one ISA of each type per tax year, but the updated rules now allow multiple subscriptions to the same ISA type (except Lifetime ISAs).

To understand your options, you can compare a range of fixed rate ISAs and fixed rate bonds to consider the features and determine which option aligns with your needs.

This depends on your savings goals and your circumstances. A fixed rate ISA may appeal to savers who have a lump sum of money that they know they won’t need to touch during the term. For example, if you’re saving for a wedding that’s booked for three years’ time, you might want to lock the money away until you need it. As interest from fixed rate ISAs doesn’t count towards the personal savings allowance, some savers use them to manage their overall tax position..

Some fixed rate ISAs limit additional deposits after the initial sum is paid in, and early withdrawals are often restricted or subject to penalties. In contrast, instant access ISAs or easy access savings accounts usually allow for top ups and withdrawals, but rates are often variable.

While Raisin UK doesn’t offer ISAs, you can access a wide range of fixed rate bonds from our partner banks and building societies. Eligible deposits with UK-regulated banks are protected up to £120,000 per person, per bank, by the Financial Services Compensation Scheme (FSCS). Simply register for a Raisin UK Account to apply online for fixed rate bonds with competitive interest rates:

1. Register for free and verify your identity online in just a few clicks

2. Log in to your Raisin UK Account to open access fixed rate bonds and other savings products

3. Transfer your deposit to your Raisin UK Account

You can learn more about how to apply by reading our guide to opening a savings account.