Ethical Cash ISAs

Choosing an ethical cash ISA

You may find financial products out there being promoted as ethical or green cash ISAs because they exclude investments in tobacco, alcohol, pornography, fur, armaments, and some oil investments, rather than making a positive impact.

While its good that these things are excluded, such ISAs are often just one option offered by a provider that doesn’t maintain the same standards for all of its products. 

Ethical cash ISA choices

A large proportion of the brands rated in this shopping guide are recommended or Best Buy companies. With scores ranging from 0 (out of 100) to 100, it is definitely possible to avoid the most unethical banks who provide cash ISAs. 

The best ethical cash ISAs, such as our Best Buys, are from providers who not only exclude the most dodgy and damaging investments, but also are very clear about what they do proactively invest in.

It’s no surprise that the Best Buys in this guide mirror those in our guide to savings accounts. 

All host multiple positive stories on their websites about projects they have funded and initiatives they are involved in. In each case, the money held in savings accounts makes this work possible.

Charity Bank, Ecology Building Society and Triodos are members of the Global Alliance for Banking on Values (GABV), a not-for-profit independent network of banking leaders from around the world committed to advancing positive change in the banking sector, and also have ethical lending policies.

This is in contrast to some of the large high-street banking groups who have the advantage of appealing to their huge numbers of existing customers, and hold around two thirds of ISA accounts. 

But dig a bit deeper into what they do with their money and you may well want to avoid them or transfer to a more ethical provider.

Mutuals good choice for ethical cash ISAs

Mutually owned entities, in the form of building societies, are a good option for cash ISAs. 

At least 75% of a building society’s business assets must be in the form of loans and mortgages secured on residential property, so they are extremely unlikely to be lending to any particularly harmful sectors, such as fossil fuels or arms manufacturing.

All the mutuals featured in this guide pick up an additional mark in our scoring system for Company Ethos due to their more democratic structures. You can read more about mutuals and building societies in our guide to savings accounts.

Should I get a cash ISA or a savings account?

The distinctive thing about UK ISAs is that the interest is all tax-free. Other things that make ISAs unusual are that you can only open one type per tax year, and there is a limit to how much you can put into them each year.

This annual limit has risen from £3,000 in 1999, to £20,000 where it has remained since 2017, and includes any combination of ISAs you have, including Innovative Finance ISAs and Stocks and Shares ISAs. 

If you have an ethical ISA, you have a place to put money safely away, and know that it is doing good, until you need it. With large amounts of money often sitting in ISAs for many years, it really can make a big difference where you put it.

Cash ISAs used to be the obvious choice for many savers because they help you avoid tax. However, cash ISAs and standard savings accounts are now on a much more even footing, thanks to the personal savings allowance, which was introduced in 2016. Basic-rate taxpayers can earn £1,000 of annual interest tax-free from savings or current a counts (as of the 2024-25 tax year). And you can pay unlimited amounts into a savings account.

Is the cash ISA allowance being cut?

It was looking likely that, at the Autumn 2025 budget, chancellor Rachel Reeves would cut the £20,000 allowance to £4,000 in an attempt to make savers use stocks and shares ISAs instead to “drive an investment culture” and boost
economic growth.

She was being lobbied by fund managers, but the building societies have warned that restrictions would reduce funds available for mortgages. Stocks and shares ISAs could deliver higher returns but they are much more risky, being reliant on the whims of the stock market.

The risk-free cash ISA is much more suitable to people who can’t afford to lose any money. But also, if your cash ISA is with a building society, your deposit will fund loans to households. With a stocks and shares ISA, your deposit could be funding unethical corporate businesses, unless you use a provider which lists all the companies it invests in.

Organisations such as the Building Societies Association (BSA) are spearheading a campaign to save cash ISAs, which has gathered support from others in the industry and Money Saving Expert’s Martin Lewis.

Transferring to a more ethical cash ISA

It is sometimes possible to transfer a cash ISA (or convert a Stocks and Shares ISA) from another provider if you already have one, though you should check if there is a penalty fee.

You will need to check if the new provider accepts transfers – our Best Buys all accept transfers.

To switch providers, contact the ISA provider you want to move to and fill out an ISA transfer form to move your account. Do not close your account yourself and transfer the money to your new provider, as you'll lose your tax-free status. 

Government efforts to promote competition in the sector mean that it’s pretty easy to move your whole cash ISA to a more ethical provider.

In theory it should take no more than 15 days, but you should follow advice on how to do it without losing its tax free status. Contacting the new provider is usually the best place to start.

Is your money safe?

All of our Best Buys and Recommendations are protected by the FSCS (Financial Services Compensation Scheme), which means up to £85,000 held per banking group would be repaid to the saver if a firm should fail. You should be aware that some banks or building societies are linked (e.g. Lloyds also owns Halifax and Bank of Scotland) and therefore share one lot of £85,000 protection. You can check the banking groups using a tool on the MoneySavingExpert website.)

Types of cash ISA

Just like savings accounts, there are several types of ethical cash ISAs to choose from. The practical details should also be checked, as they vary on how much you need to deposit to open one, and how restricted withdrawals are, as well as interest rates.

• Easy Access is good if you may need to withdraw money, but probably will have lower interest.
• Regular Savings is good if you can make a monthly deposit, and should have higher interest.
• Notice or Fixed are good if you are able to wait to withdraw money, and should have higher interest.
• Junior ISAs  are for savers under 18 years old. Parents or guardians can open and manage the accounts, but the money belongs to the child. Up to 16 or 18 years is a good amount of time to build up savings, and they may have higher interest rates too. The annual deposit limit is currently £9000.
• If you are aged between 18-39, you can open a Lifetime ISA (LISA) account, which is specifically to save for a first home, or retirement. They can be cash ISAs or stocks and shares (investment). You can save up to £4,000 a year and receive a maximum bonus of £1,000 each year until you are 50. However, the withdrawal conditions are strict – the money can only be accessed without penalty for a first home purchase (up to £450,000) or for retirement after the age of 60. If the funds are withdrawn for any other reason apart from a terminal illness diagnosis, a steep 25% penalty is applied.
  Best Buys for LISAs: Not as many companies offer lifetime ISAs as the other types of ISA. Skipton and Newcastle were the highest scoring building societies to offer Lifetime ISAs. These are followed by Paragon Bank.
   

Other types of ISA

Innovative Finance ISAs

An innovative finance ISA – sometimes called an IFISA – is an ISA that contains peer-to-peer loans instead of cash in a bank or stocks and shares in companies. They were introduced in 2016 to make it easier to invest tax-free with a wider range of providers. These types of ISAs are at risk, and not protected by the FSCS.

Peer-to-peer lending matches up investors, who are willing to lend, with borrowers, who could be individuals, businesses, or property developers.

See our guide to ethical IFISAs for more details. We will be updating this guide in June 2025.

Stocks and shares ISAs

See our guide to ethical stocks and shares ISAs. We will be updating this guide in the next magazine due out mid June 2025.

These types of investment can be linked to ethical investment funds. These ISAs are also at risk, and not protected by the FSCS.