Can I hold the Fidelity Cash Fund tax-free in an ISA?

Q: Is the Fidelity Cash fund considered a money market fund, so it’s ok to hold free of tax in an ISA?

A: Yes. The Fidelity Cash Fund is a money market fund - the terms ‘cash fund’ and ‘money market fund’ are often used interchangeably - and it can be held in a Stocks and Shares ISA.

Money market funds are designed to sit at the lower end of the risk/reward spectrum. They typically invest in very short-term financial products such as treasury bills, certificates of deposit and short-term bonds issued by governments, banks and companies. The aim is to provide a cash-like return, but unlike cash, your money is invested - so the value can fall, and returns aren’t guaranteed.

Under current rules, returns from the Fidelity Cash Fund are free from UK tax while held within a Stocks and Shares ISA. But ISA reforms have recently been announced.

The key point under the planned ISA reforms from April 2027 is that money market funds should not make up 100% of your Stocks and Shares ISA. But as long as the Fidelity Cash Fund is not the only investment in your Stocks and Shares ISA, returns can continue to be free from UK tax within the ISA.

For more information on the upcoming ISA changes, please read: How ISAs could change in 2027.

Other cash funds are available on our platform. You can see a full list in the article ‘investing in cash in a stocks and shares ISA below’.

• Read: Cash ISA versus cash funds: the basics
• Read: Investing in cash in a Stocks and Shares ISA: the basics
• Read: What is a stocks and shares ISA? The basics

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Before investing into a fund, please read the relevant key information document which contains important information about the fund. Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.