Cash on investment platforms: client money and interest

Money left sitting in an investment account, waiting to be invested or after selling something, is usually treated differently from the investments around it. Most platforms pay interest on this uninvested cash, calculated daily and credited monthly, but they commonly keep part of that interest rather than charging a separate fee for holding the cash¹. The cash is generally held in separate client money accounts, usually with UK banks, rather than being invested².

Two things matter most to anyone holding cash this way. First, what the platform pays and keeps: rates vary, some platforms retain all the interest, and the rate can change or fall to zero. Second, protection and tax: cash held as client money is not the same as a bank deposit for FSCS purposes, and from April 2027 a flat 22% charge applies to interest on cash held in stocks and shares and innovative finance ISAs³.

Interest is calculated daily and paid monthly

The standard arrangement across platforms is that interest on uninvested cash accrues every day on the balance and is credited once a month. Quilter, for example, states that interest on its cash facility "is calculated daily and paid on the first working day of the month"¹. Barclays Smart Investor works on the same pattern for its Direct Investing accounts: interest is paid on the first day of each month, based on the cash held in the account the previous month⁶.

This daily calculation, monthly payment rhythm is the same one used across savings accounts generally, from easy access accounts at banks and building societies to notice accounts. Loughborough Building Society, Hodge, HSBC's MySavings and Secure Trust Bank's Access Account all describe interest calculated daily and applied or paid monthly⁷. The practical effect for a platform customer is that cash deposited mid-month starts earning from the day it clears, and the interest appears in the account shortly after the month ends, where it then counts as cash itself.

Two details vary between platforms and are worth checking in your own account terms. The first is the payment date: Quilter pays on the first working day of the month, Barclays on the first day of the month, and others may pay at the month end. The second is the rate, which is set by the platform and can change at any time. Quilter publishes a table of its cash rates with effective dates, showing the rate it pays and the amount it retains, which as of 11 September 2026 was 1.16% retained on its cash facility¹. Nothing guarantees a platform pays interest at all: InvestEngine states that it retains the interest on cash held with it, so customers receive none⁸.

Interest credited to the account becomes part of the cash balance, so it is available to invest or withdraw on the same terms as the rest of the cash. In an ISA, credited interest stays inside the ISA wrapper.

Retained interest instead of a fee: how platforms charge on cash

Platforms make money from cash in one of two ways: a visible charge, or a slice of the interest. Quilter is explicit about which it uses: "We do not take a service/product charge on cash, instead we retain some of the interest earned on it"¹. InvestEngine sits at the other end of the range and keeps everything: "Some platforms provide interest on cash held with them. We retain this interest"⁸.

Retained interest is one of several ways platforms that advertise low or no fees fund themselves. Which? notes that no-fee platforms "make their money in other ways, such as foreign exchange fees or keeping cash interest, or upgrading customers to paid products such as managed portfolios or premium tiers"⁹. Platforms that do charge generally use one of two structures: a percentage annual fee on the value of your holdings, or a fixed amount each year¹⁰. Most platforms do not charge extra simply for holding an ISA, though the funds available and other costs differ between them¹¹.

What this means in practice is that the headline interest rate a platform quotes on cash is not the whole story. The rate the bank pays the platform, the rate the platform passes on, and the difference between them, which is the platform's income, are separate figures. Quilter's published rates show all three: as of 11 September 2026 the underlying rate was 3.39%, of which the platform retained 1.16% and paid on 2.23%¹. A platform quoting a lower rate may be retaining more, and one quoting no rate at all may be retaining everything.

What platform cash is for

Platforms themselves are clear that their cash facilities are working balances, not savings accounts. Quilter says the main purpose of its cash facility is "to support the efficient running of investments by avoiding small trades that could limit other activity, for example paying for fees and charges, or when making payments in and out"¹². It adds that the facility "is designed for short term use and not for holding cash over a number of months or years"¹².

Typical uses of a cash balance on a platform include:

• money just paid in, waiting to be invested
• proceeds from selling investments, before reinvesting or withdrawing
• cash held temporarily, such as in preparation for a planned withdrawal¹
• a balance kept for paying platform fees and charges

Quilter states that its cash facility "is not intended for those who wish to invest high proportions of their account in cash holdings for longer periods"¹. On some products there is no cash option at all: for customers invested in its Collective Investment Bond, cash cannot be selected as an investment option and is only used transactionally, with no interest paid on it¹².

The distinction matters because of what else is available. Money that will not be invested for a while can be held in a savings account or a cash ISA, where it earns the account's rate in full and, in a bank or building society, sits inside FSCS deposit protection. The guide to investing versus saving covers how the two compare.

Where your cash is held and how it is protected

Uninvested cash on an investment platform is not normally held by the platform itself as its own money. Which? explains that "many investment platforms hold your money in separate client money accounts, usually with UK banks"². Under client money rules, this cash is segregated from the platform's own funds, so if the platform fails, the cash is not part of its assets and should be returned to customers.

This is a different protection from FSCS deposit protection, and the difference is worth understanding. FSCS deposit protection covers money in bank and building society accounts: the FSCS describes a deposit as "money in accounts such as current and savings accounts, including cash ISAs"⁴, and the Bank of England lists what this includes: current accounts, savings accounts, cash ISAs and savings bonds¹³. By contrast, many investment platforms hold your money in separate client money accounts, usually with UK banks¹⁴.

Cash held as client money on a platform is not a deposit in that sense. Its protection comes from the segregation rules: the money is yours, held separately, and does not become the platform's property. If the platform failed, the expectation is that client money is returned in full rather than being claimed from the FSCS deposit scheme. The FSCS can still matter if a bank holding the client money failed, or if the platform had failed to segregate the money properly, in which case FSCS may step in. The dedicated guide to what happens if a platform fails covers this in detail.

Which? sets out investors' rights here, including that your money should be held separately from the firm's own money². If you are unsure how your platform holds cash, its terms should say, and the FCA Register shows the firm's permissions.

Withdrawing cash from an investment account

Uninvested cash is generally the most accessible part of an investment account. Quilter describes its cash facility as instant access, defining that as accounts with less than 31 days' notice, and says customers with an ISA, Collective Investment Account or Collective Retirement Account "can choose to hold some of their investment in cash temporarily, such as in preparation for a planned withdrawal"¹. Withdrawing cash to your bank account is normally done online and takes a few working days; the page on platform withdrawal times covers the typical process.

A few things can slow a withdrawal or reduce what you receive:

• Money must be cleared. Cash from a recent sale may need to settle before it can be withdrawn.
• Transfers out can cost. Which? notes that "you might be charged if you transfer investments from one platform to another", though many platforms have scrapped exit fees and some will cover switching costs as an incentive to join them⁹.
• Fixed term products differ. A fixed rate cash ISA usually cannot be withdrawn from during the term without penalty, unless the product rules allow it¹⁵.

For comparison, instant access savings accounts outside platforms let you withdraw whenever you need to¹⁶, and NS&I's Index-linked Savings Certificates can be cashed in at any time with no penalty¹⁷. Platform cash sits somewhere between these: accessible, but processed through the platform's own withdrawal timescales rather than a bank branch or counter.

Rates can fall to zero: the risks of holding cash on a platform

The rate a platform pays on cash is variable and set by the platform. It can be cut, and on some platforms it is zero from the start, because the platform retains all the interest⁸. Quilter's published rate history shows rates changing on set dates, which is normal practice¹.

Beyond the rate itself, holding cash carries risks that apply wherever it is held:

• Inflation. MoneyHelper warns that with fixed rate savings bonds, "your original investment won't hold its value in real terms (its 'buying power') if the interest you're getting is less than the rate of inflation over the investment period"¹⁸. The same logic applies to any cash balance earning less than inflation.
• Purchasing power erosion. The Investment Association makes the general point that "interest rates often fail to keep pace with inflation, meaning that your cash is losing its purchasing power"¹⁹.
• Platform failure. FCA rules on peer-to-peer agreements state plainly that "if the platform fails, it may be impossible for you to collect money on your loan"²⁰. That is a specific risk of P2P lending rather than mainstream platform cash, but it shows why the question of where money is held matters. Client money segregation is the protection that answers it for platform cash².
• Investment risk, by contrast. The Investment Association also notes that with investing, "in extreme circumstances you could even lose all your money"¹⁹. Cash on a platform avoids market risk but takes inflation and rate risk instead.

There is also a tax-driven consideration. Which? has reported on whether taking a lower savings rate can beat the taxman, noting for example that the top instant access cash ISA could yield £152 more interest after a year than the market-leading savings account for a higher rate taxpayer with £20,000, assuming the variable rate stays the same²¹. The relevance here is that interest earned outside any tax-free wrapper can be taxable, while interest inside a cash ISA is not, which can make a lower headline rate inside a wrapper worth more than a higher rate outside it.

How cash in an ISA is taxed now

The starting point is that ISAs are tax exempt. The original ISA regulations provide that no tax is chargeable on the account manager, the nominee or the account investor in respect of interest, dividends, distributions or gains on account investments, and losses are disregarded for capital gains tax²². Interest on cash deposits in a cash component is not regarded as income for income tax purposes²².

For cash ISAs specifically, interest is tax free and does not count towards your ISA allowance: as Which? puts it, "the interest you earn in a cash Isa doesn't count towards your allowance"²³. So interest that builds up inside a cash ISA does not eat into the allowance you have left, however much it grows to.

Uninvested cash in a stocks and shares ISA has been treated differently for some years. When the New ISA rules were introduced in 2014, the government's impact assessment noted that "interest arising on uninvested cash held in a stocks and shares ISA will be subject to a flat rate charge representing tax at basic rate"²⁴. In other words, the tax free wrapper has never extended to interest on cash sitting uninvested in a stocks and shares ISA; the manager accounts for the charge rather than the investor.

One point of housekeeping: uninvested cash held in an ISA counts towards the ISA's value for inheritance tax valuation purposes. HMRC guidance says you "must include a figure for any uninvested cash held in the ISA" when valuing shares held in an ISA¹⁴.

Upcoming changes to cash in stocks and shares ISAs from April 2027

The rules on cash in stocks and shares ISAs are being tightened from April 2027, in three connected ways.

A 22% charge on interest. The government's anti-circumvention factsheet states that "a flat rate charge (22%) will apply to any interest or alternative finance return paid on cash held within a non Cash ISA"³. The same figure appears in the policy statement on the cash ISA limit reduction: "a flat rate charge of 22% on any interest paid on cash held in non-cash ISAs"²⁵. The charge is deducted at source: Which? reports that "the investment platform or the asset managers will remove that charge on your behalf"²⁶. The legislation provides that the account manager must pay the Board an amount representing income tax at the savings basic rate in force for the year, that no relief from tax applies to such interest, and that no repayment of tax may be made to the investor²⁷.

No more using a stocks and shares ISA as a cash substitute. The same reforms bar 100% cash-like portfolios in non-cash ISAs and restrict transfers into cash ISAs. The consultation on the Individual Savings Account (Amendment) Regulations 2026 says the legislation "introduces a charge on any interest paid on cash held in a S&S ISAs and IFISA"²⁸. The draft regulations allow a transfer into a cash account only if the account investor is 65 or over at the end of the year²⁷. For those aged 65 and over, the government states that "the charge on interest earned on cash held in non Cash ISAs and the prohibition on 100% cash-like investments will remain in place"³, so the age distinction affects the transfer route and the cash ISA limit, not the charge itself.

Money market funds become qualifying investments. From 6 April 2027, the regulations substitute paragraph (p) of the qualifying investments rules to read simply "money market funds" for the cash component²⁹. For the stocks and shares component, money market funds qualify subject to the condition that 100% of the value of the investments, other than cash, held under the component must not be money market funds³⁰. The effect is that a cash ISA will be able to hold money market funds directly, while a stocks and shares ISA cannot be filled entirely with them.

The tax-free savings newsletter confirms the direction of travel: the charge applies to interest paid on cash held in stocks and shares and innovative finance ISAs for investors under 65 from 6 April 2027³¹. The Tax Update 2026 summary describes the same measure as "a 22% charge on interest paid on cash holdings held in Stocks & Shares and Innovative Finance ISAs (non Cash ISAs)"³². Which? has also covered the innovative finance ISA angle: from April 2027, any cash in an innovative finance ISA that is not currently invested faces the 22% charge³³.

The government's stated aim, reflected in the official statistics on ISAs, is that stocks and shares ISA funds can only transfer to another stocks and shares ISA, while cash ISA funds can transfer to either type³⁴. The practical message for anyone holding large uninvested balances in a stocks and shares ISA is that from April 2027 that cash earns materially less after the charge, and the routes to move it into a cash ISA narrow.

Cash in a SIPP and a general investment account

The same mechanics of daily interest, retained interest and client money segregation apply to cash held in other platform accounts, including SIPPs and general investment accounts. Quilter's cash facility covers its ISA, Junior ISA, Collective Investment Account and Collective Retirement Account, each with its own cash facility¹², and its interest rates page applies the same daily calculation and monthly payment to all of them¹.

For SIPP cash, the same cautions apply as for ISA cash: the platform sets the rate, may retain part or all of the interest, and the cash is a working balance rather than a savings vehicle. InvestEngine's SIPP pages state the platform's position on cash interest in transfer contexts, retaining interest on cash held with it⁸. Money in a SIPP is held for retirement and access rules apply, so cash in a SIPP cannot simply be withdrawn at will regardless of how accessible the cash facility itself is.

In a general investment account, with no tax wrapper, interest on cash is taxable income in the normal way, subject to the personal savings allowance and tax bands. The page on how investments are taxed covers this. The Lifetime ISA, which can hold either cash or stocks and shares³⁵, is another wrapper where the cash rules need checking before holding large uninvested balances.

Complaints and free help

If something goes wrong with interest on your cash, a missing payment, a rate that does not match the platform's published terms, or cash that was not held as the terms said it would be, the first step is a complaint to the platform itself. Firms must respond within set timescales, and if you are not satisfied, the Financial Ombudsman Service can look at complaints about ISAs and investment accounts free of charge³⁶. Which? also sets out your rights as an investor, including how your money should be held².

Free, impartial help is available from MoneyHelper, the government-backed money guidance service, which explains savings products including fixed rate bonds and how they work¹⁸. For questions about how the 2027 ISA changes affect a particular situation, the government's consultation documents and factsheets are the authoritative source³, and the ISA section guide covers the wrappers themselves.