Key takeaways
- You can put up to £20,000 into ISAs in 2026/27, split however you like between cash, stocks and shares, innovative finance and Lifetime ISAs.
- Interest, dividends and gains inside an ISA are free of Income Tax and Capital Gains Tax, and do not need reporting.
- From 6 April 2027 no more than £12,000 a year can go into cash ISAs for people under 65; the overall £20,000 limit stays.
- A Lifetime ISA takes up to £4,000 a year with a 25% government bonus, but withdrawals for other purposes before 60 cost a 25% charge.
- Junior ISAs allow £9,000 a year for children; the money belongs to the child at 18.
An Individual Savings Account (ISA) is a wrapper that shelters savings and investments from tax. With the Personal Savings Allowance, Dividend Allowance and Capital Gains Tax exemption all much smaller than they were, and savings tax rates rising in 2027, ISAs matter more each year.
ISA allowances for 2026/27
| Account | Annual limit 2026/27 | Notes |
|---|---|---|
| Overall ISA allowance | £20,000 | Shared across all your adult ISAs |
| Lifetime ISA | £4,000 | Counts towards the £20,000; 25% government bonus |
| Junior ISA | £9,000 | Separate allowance for each child under 18 |
| Child Trust Fund | £9,000 | Older accounts for children born 2002 to 2011 |
The tax year runs from 6 April to 5 April. Unused allowance cannot be carried forward. These limits are fixed until 5 April 2031.
The cash ISA limit from April 2027
From 6 April 2027, savers under 65 can put no more than £12,000 a year into cash ISAs. The overall limit stays at £20,000, so the other £8,000 can still go into stocks and shares or other ISA types. Savers aged 65 or over can continue to put the full £20,000 into cash.
Types of ISA
- Cash ISA: savings accounts paying tax-free interest.
- Stocks and shares ISA: investments such as funds, shares, investment trusts and bonds, with tax-free dividends, interest and gains.
- Innovative finance ISA: peer-to-peer loans and some crowdfunding debentures. Higher risk and not covered by the Financial Services Compensation Scheme in the same way.
- Lifetime ISA: for first homes or retirement (below).
You can pay into more than one ISA of the same type in a tax year, as long as you stay within the overall limits.
The tax benefits
| Income or gain | Outside an ISA (2026/27) | Inside an ISA |
|---|---|---|
| Savings interest | Tax-free up to £1,000 or £500, then 20% to 45% (rising to 22% to 47% from April 2027) | Tax-free |
| Dividends | Tax-free up to £500, then 10.75% to 39.35% | Tax-free |
| Capital gains | Tax-free up to £3,000, then 18% or 24% | Tax-free |
| Reporting | Self Assessment may be needed | Nothing to report |
Example
A higher rate taxpayer holds £60,000 in a share portfolio yielding 3% outside an ISA. Dividends of £1,800 a year leave £1,300 above the £500 allowance, costing £464.75 a year in dividend tax at 35.75%. In an ISA the dividends would be tax-free, and any gain on sale would not count against the £3,000 CGT exemption.
Bed and ISA
If you hold investments outside an ISA, you can sell them and buy them back inside an ISA each tax year, within your allowance. The sale may create a capital gain, so it often makes sense to use the £3,000 annual exempt amount at the same time. See Capital Gains Tax on shares.
Lifetime ISA
- open between ages 18 and 39; pay in until 50
- up to £4,000 a year, with a 25% government bonus (up to £1,000 a year)
- withdraw without penalty to buy a first home costing up to £450,000, or from age 60, or if terminally ill
- any other withdrawal carries a 25% charge on the amount withdrawn, which takes back the bonus and some of your own money
The £450,000 property limit has not changed since the account launched in 2017, so first-time buyers in higher-priced areas should check it still works for them.
Junior ISA
Parents or guardians can open a Junior ISA for a child under 18 who lives in the UK. Anyone can pay in, up to £9,000 a year in total. The money belongs to the child and cannot be withdrawn until 18, when the account becomes an adult ISA. Since 6 April 2024 the minimum age for opening an adult cash ISA has been 18.
Flexible ISAs and transfers
- A flexible ISA lets you withdraw cash and put it back in the same tax year without using more allowance. Not all providers offer it.
- You can transfer ISAs between providers without losing the tax wrapper. Always use the transfer process; withdrawing and paying in again uses new allowance.
ISAs on death
When an ISA holder dies, the account becomes a “continuing account of a deceased investor” and stays tax-free until the estate is settled, for up to three years. A surviving spouse or civil partner can receive an additional permitted subscription equal to the value of the deceased’s ISAs, on top of their own allowance. ISAs do form part of the estate for Inheritance Tax.
Frequently asked questions
What is the ISA allowance for 2026/27?
£20,000 in total, of which up to £4,000 can go into a Lifetime ISA. The Junior ISA allowance is £9,000 per child.
Is the cash ISA allowance being cut?
Yes. From 6 April 2027 people under 65 can put no more than £12,000 a year into cash ISAs, within the unchanged £20,000 overall limit.
Do I need to declare ISA interest on my tax return?
No. ISA income and gains are tax-free and do not need reporting to HMRC.
Can I have more than one ISA?
Yes. You can pay into several ISAs in a tax year, including more than one of the same type, as long as the total stays within £20,000.
What happens if I put more than £20,000 into ISAs?
The excess is not tax-free. HMRC will tell your provider to remove the excess subscription and any income or gains it produced from the ISA wrapper.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance in October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.