Individual Savings Accounts, commonly called ISAs, allow UK residents to save or invest without paying UK tax on eligible interest, investment income or capital gains generated inside the account.
For the 2026/27 tax year, the overall adult ISA allowance is £20,000. The tax year began on 6 April 2026 and ends on 5 April 2027.
This guide explains the current UK ISA rules in plain English. Tax rules can change, so check official government guidance before making important financial decisions.
Important: This guide is for general education and does not constitute personal financial or tax advice. Investments can fall as well as rise, and you may receive less than you invest.
UK ISA allowances for 2026/27
| ISA type | 2026/27 annual limit | Main purpose |
|---|---|---|
| Cash ISA | Up to £20,000 within the overall allowance | Tax-free cash savings |
| Stocks and Shares ISA | Up to £20,000 within the overall allowance | Long-term investing |
| Innovative Finance ISA | Up to £20,000 within the overall allowance | Eligible peer-to-peer and alternative investments |
| Lifetime ISA | £4,000 within the overall allowance | First home or later life |
| Junior ISA | £9,000 per child | Long-term saving or investing for a child |
The £20,000 adult allowance is shared across the adult ISA types. You do not receive a separate £20,000 allowance for each one. The Junior ISA has its own £9,000 annual limit.
How the £20,000 ISA allowance works
You can place the full £20,000 into one eligible ISA or divide it across several accounts.
For example, during 2026/27 you could contribute:
- £8,000 to a Cash ISA
- £8,000 to a Stocks and Shares ISA
- £4,000 to a Lifetime ISA
Your total contributions would be £20,000, so you could not make further ISA contributions during that tax year.
Current rules also allow you to contribute to more than one ISA of the same type. For example, you could pay £5,000 into one Cash ISA and £3,000 into another, provided all your ISA contributions remain within the overall limit.
The main exception is the Lifetime ISA. You can only contribute to one Lifetime ISA during a tax year.
Can unused ISA allowance be carried forward?
No. Any unused allowance expires at the end of the tax year on 5 April.
For example, contributing £12,000 by 5 April 2027 does not give you an extra £8,000 of allowance in 2027/28. A new allowance starts on 6 April.
What are the tax benefits of an ISA?
You generally do not pay UK tax on:
- Interest earned on cash held in an ISA
- Dividends or other eligible investment income inside an ISA
- Capital gains made on investments inside an ISA
ISA interest, income and gains normally do not need to be declared on a Self Assessment tax return.
The ISA allowance applies to money contributed, not the account’s total value.
For example, suppose you contribute £20,000 and your investments later grow to £23,000. The £3,000 increase does not use additional ISA allowance.
The four main adult ISA types
Cash ISA
A Cash ISA is a tax-efficient savings account. It can be suitable for emergency funds, short-term goals or savers who do not want their capital exposed to investment-market movements.
Cash ISA products may include:
- Easy-access accounts
- Notice accounts
- Fixed-term accounts
Compare the interest rate, withdrawal conditions and whether the account is flexible before opening one.
Stocks and Shares ISA
A Stocks and Shares ISA allows you to hold qualifying investments in a tax-efficient account.
Depending on the provider, these may include:
- Exchange-traded funds
- Investment funds
- Individual company shares
- Government and corporate bonds
- Investment trusts
A Stocks and Shares ISA may suit goals at least five years away. Its value can rise and fall, so it is usually unsuitable for emergency savings or money needed soon.
Provider fees, fund charges and dealing costs can reduce your returns. Compare the total cost rather than looking only at the advertised platform fee.
Lifetime ISA
A Lifetime ISA can be used to save towards an eligible first home or for later life.
You must be at least 18 but under 40 when you make your first Lifetime ISA contribution. You can contribute up to £4,000 per tax year until you turn 50.
The government adds a 25% bonus, worth up to £1,000 when you contribute the full £4,000. Your Lifetime ISA contribution forms part of your overall £20,000 adult ISA allowance.
To use a Lifetime ISA for a first-home purchase under the current rules:
- The property must cost £450,000 or less.
- You must buy at least 12 months after your first Lifetime ISA payment.
- You must purchase using a mortgage.
- The money must be paid to a solicitor or conveyancer handling the purchase.
- You must qualify as a first-time buyer.
You can also withdraw without the standard charge from age 60 or when terminally ill with less than 12 months to live.
Most other withdrawals face a 25% government charge. This can leave you with less than your original contribution because the charge applies to both your money and the government bonus.
Innovative Finance ISA
An Innovative Finance ISA can hold certain eligible peer-to-peer loans, crowdfunding debt and other qualifying investments.
These products may involve higher levels of risk than ordinary cash savings. Borrowers can default, access to money may be restricted and the investments may not have the same protections as bank deposits.
Only consider products you understand, and check the provider’s regulatory status and risk warnings carefully.
Junior ISA rules for 2026/27
A Junior ISA is a long-term, tax-efficient account for an eligible child under 18.
The Junior ISA contribution limit for 2026/27 is £9,000. A child can have a Cash Junior ISA, a Stocks and Shares Junior ISA, or both, provided total contributions remain within the annual limit.
A parent or guardian with parental responsibility usually opens and manages the account, although other people can contribute.
The money legally belongs to the child. The child can generally take control of the account from age 16 but cannot withdraw the money until reaching 18. At 18, the account normally becomes an adult ISA.
A child cannot hold a Junior ISA and a Child Trust Fund simultaneously. An existing Child Trust Fund would need to be transferred to a Junior ISA.
Who can open an adult ISA?
You must usually:
- Be aged 18 or over
- Be resident in the UK
Special rules can apply to Crown servants, members of the armed forces and some spouses or civil partners living abroad.
A Lifetime ISA has the additional requirement that your first contribution must be made before you turn 40.
ISAs are individual accounts. You cannot open a joint ISA with a spouse, partner or another person.
Each eligible partner has their own ISA allowance. A couple could therefore contribute up to £40,000 between their individual adult ISAs during 2026/27.
ISA withdrawals and flexible ISAs
Money can generally be withdrawn from an ordinary Cash ISA or Stocks and Shares ISA without losing the tax benefits already earned. However, your provider may impose notice requirements, trading costs or early-access charges.
A flexible ISA lets you withdraw money and replace it during the same tax year without the replacement using additional allowance.
For example, suppose you contribute £10,000 and later withdraw £3,000:
- With a flexible ISA, you may be able to contribute another £13,000 that tax year.
- With a non-flexible ISA, you would normally have only £10,000 of allowance remaining.
Check with the provider because not every ISA is flexible. Lifetime ISAs have separate withdrawal rules.
How to transfer an ISA correctly
Do not normally withdraw ISA money yourself when moving it to another provider.
Ask the new provider to complete an official ISA transfer. This protects the money’s tax-efficient status and prevents the transfer from being treated as a new contribution.
You can currently transfer all or part of an ISA to another provider, although Lifetime ISAs, Junior ISAs and some investments have additional restrictions. Providers may also charge transfer or exit fees.
Important ISA changes from April 2027
The government has announced that from 6 April 2027, the Cash ISA contribution limit for people under 65 will fall to £12,000. The overall ISA allowance will remain £20,000, and the Cash ISA limit for people aged 65 or over will remain £20,000.
Further announced reforms include restrictions on transfers from non-cash ISAs into Cash ISAs and changes affecting interest earned on cash held inside non-cash ISAs. Detailed regulations are due before the reforms take effect, so this section should be reviewed again before April 2027.
The government is also consulting on a proposed new first-time-buyer ISA that would eventually be offered in place of the Lifetime ISA. The existing Lifetime ISA remains available under its current rules until a replacement is introduced.
Which ISA might suit your goal?
| Financial goal | ISA commonly considered |
|---|---|
| Emergency savings | Easy-access Cash ISA |
| Goal within five years | Cash ISA or suitable fixed-term Cash ISA |
| Long-term wealth building | Stocks and Shares ISA |
| Eligible first-home deposit | Lifetime ISA |
| Saving for retirement before pension access | Stocks and Shares ISA or Lifetime ISA |
| Saving for a child | Junior ISA |
This table is a starting point, not a personal recommendation. Your time horizon, emergency savings, debts, tax position and ability to accept losses all matter.
Frequently asked questions
Can I have more than one ISA?
Yes. You may hold and contribute to multiple ISAs, provided your total new contributions remain within the annual allowance. You can only contribute to one Lifetime ISA in the same tax year.
Does investment growth count towards my ISA allowance?
No. The allowance applies to new contributions. Interest, dividends and investment growth generated within the ISA do not use more allowance.
Do ISA transfers use my annual allowance?
A correctly completed provider-to-provider ISA transfer does not normally count as a new contribution. Withdrawing the money yourself and redepositing it could use your allowance or cause the money to lose its ISA protection.
Can I withdraw from a Stocks and Shares ISA?
Yes, although you may need to sell investments first. Selling during a market decline could lock in a loss, and the provider may charge dealing or withdrawal fees.
Is an ISA the same as a pension?
No. Both offer tax advantages, but the contribution, tax-relief and withdrawal rules are different. Workplace pensions may also include employer contributions. Many people use pensions and ISAs together for different goals.
Start building your wealth plan
An ISA is an account wrapper, not an investment strategy. Choose the account according to the purpose of the money, how soon you will need it and how much risk you can accept.
For a practical framework covering emergency funds, debt repayment, ISAs and ETF investing, read Building Wealth with ISAs and ETFs: A Practical 6-Step UK Plan. You can also download the free Success Blueprints starter kit to organise your next steps.