Interest rates we pay on cash

Each tiered interest rate applies to the cash in that specific tier. Let’s say you had £120,000 cash in a SIPP or Stocks and shares ISA, £10,000 of this money would earn the '£0–£10,000' interest rate, the next £90,000 would earn the ‘Above £10,000–£100,000’ interest rate while the final £20,000 would earn the ‘Above £100,000’ interest rate.

If you had £25,000 cash in a Dealing account, £10,000 of this money would earn the '£0–£10,000' interest rate, while the remaining £15,000 would earn the 'Above £10,000' interest rate.

If you hold cash in more than one AJ Bell account (e.g. a SIPP and a Dealing account), we’ll consider your accounts separately when we calculate the tiered interest.

• + See examples of how the tiers work

  Below are examples of how interest would be calculated for cash held in each tier for an ISA.

  £5,000 cash in an ISA

  Interest rate tier	Interest rate applied to your cash	Interest you'll recieve
  £0–£10,000	The full balance of £5,000 receives 1.81% AER interest	£90.50 per year (Calculation: £5,000 x 0.0181)
  Above £10,000-£100,000	There is no interest payable for this tier	£0.00
  Above £100,000	There is no interest payable for this tier	£0.00
  Total interest per year		£90.50

  £25,000 cash in an ISA

  Interest rate tier	Interest rate applied to your cash	Interest you'll recieve
  £0–£10,000	The first £10,000 receives 1.81% AER interest	£181.00 per year (Calculation: £10,000 x 0.0181)
  Above £10,000-£100,000	The remaining £15,000 receives 2.02% AER interest	£303.00 per year (Calculation: £15,000 x 0.0202)
  Above £100,000	There is no interest payable for this tier	£0.00
  Total interest per year		£484.00

  The above examples are based on £5,000 and £25,000 and assume no extra money is added or withdrawn from the ISA in the year. The tables show examples of interest earned annually based on the AERs – actual interest earned will be calculated by applying a blended gross interest rate to your cash balance based on the cash that falls into each tier. Interest will be paid to your account quarterly in arrears, at the end of March, June, September and December.

When you start accessing your pension via drawdown you will receive the drawdown interest rates on all of the cash held in your SIPP.

You’ll receive the drawdown interest rates for the full quarter in which you access your SIPP providing that we’ve received and processed your request by the end of the quarter. Please keep in mind that it can take ten working days to process a request to access your SIPP.

Please note that if you access your SIPP via a pension lump sum (UFPLS) you’ll continue to receive the SIPP interest rates as shown in the first table above.

AJ Bell receives interest payments from banks based on the combined cash balances held for customers across all accounts. The amount we receive will vary depending on the total cash balances held, and on market interest rates. We put some of these payments towards the interest rates we pay you, as shown in the tables above, and the rest towards keeping our account and dealing charges as low as possible.

We hold your cash with a range of carefully selected banks – using multiple banks increases the level of protection provided for your cash. Find out more about the banks we use and how your cash is protected.

In the future, we expect to receive interest payments from banks between 1.15% below and 0.15% above the Bank of England base rate for cash held in a SIPP, and between 0.10% below and 0.15% above the Bank of England base rate for cash held in an ISA or Dealing account: keep in mind though that these rates may be higher or lower when interest rates are volatile.