UK ISA Allowance 2026/27

An Individual Savings Account (ISA) is one of the most valuable tax-free savings and investment wrappers available to UK residents. Unlike regular savings accounts or investment accounts, any interest, dividends, or capital gains earned inside an ISA are completely exempt from UK Income Tax and Capital Gains Tax — regardless of how much grows inside them. This guide covers everything you need to know about the ISA allowance for 2026/27 and how to make the most of it.

What Is the ISA Allowance for 2026/27?

The annual ISA allowance for the 2026/27 tax year (6 April 2026 to 5 April 2027) is £20,000 per person. This has remained unchanged since 2017/18. You can split this £20,000 across different types of ISA in the same tax year — for example, £10,000 in a Cash ISA and £10,000 in a Stocks & Shares ISA. Any allowance you do not use by 5 April is permanently lost; it does not roll over to the next tax year.

Types of ISA Available in 2026/27

Cash ISA

Works like a standard savings account but all interest is tax-free. Available from most high street banks, building societies, and online savings platforms. Currently offering rates between 3.5% and 5% for fixed-term or easy-access accounts. Eligible deposits are protected by the Financial Services Compensation Scheme (FSCS) up to £85,000 per institution. Best for money you might need within 1–5 years, where capital preservation matters more than growth.

Stocks & Shares ISA

Lets you invest in shares, investment funds, ETFs, bonds, and investment trusts without paying Capital Gains Tax on profits or Income Tax on dividends. Historically, a globally diversified index fund has returned around 7–10% per year over long periods — significantly more than cash over 10+ years, but with short-term volatility. Capital is at risk and is not FSCS protected against investment losses (only against provider insolvency). Best for long-term goals (5+ years) where you can ride out market downturns.

Lifetime ISA (LISA)

You can save up to £4,000 per year into a LISA (this counts towards your overall £20,000 allowance), and the government adds a 25% bonus — up to £1,000 free per year. Must be opened before age 40. You can use the LISA for either:

• Buying your first home — property must be worth £450,000 or less.
• Retirement from age 60.

Withdrawing for any other reason incurs a 25% government withdrawal charge — which effectively takes back more than the bonus you received. Choose a LISA only if you are certain of one of the two eligible uses.

Innovative Finance ISA (IFISA)

Invests in peer-to-peer (P2P) lending and crowdfunding. Higher potential returns than cash but significantly higher risk — IFISA investments are not FSCS protected. Several P2P platforms have failed in recent years, resulting in investor losses. Only suitable for experienced investors comfortable with illiquid, high-risk lending.

Junior ISA (JISA)

A separate allowance of £9,000 per year for under-18s. Available as Cash JISA or Stocks & Shares JISA. Parents or guardians open the account; the child can manage it from age 16 and access it at 18. The JISA does not count towards the parent's £20,000 allowance.

Key Rule Change Since April 2024 — Multiple ISAs of the Same Type

Before April 2024, you could only pay into one ISA of each type per tax year — so you could have one Cash ISA and one Stocks & Shares ISA but no more. Since April 2024, you can open and fund multiple ISAs of the same type in the same tax year, as long as total contributions across all ISAs stay within your £20,000 annual allowance. This makes it easier to switch providers mid-year or consolidate accounts.

Should I Use a Cash ISA or Stocks & Shares ISA?

The right choice depends on your time horizon and attitude to risk:

• Under 3 years: Cash ISA. Market volatility means stocks could be worth less when you need the money.
• 3–5 years: Mixed. Consider splitting the allowance between cash and a low-risk investment fund.
• 5+ years: Stocks & Shares ISA is generally recommended. Historically, diversified global equities have beaten cash inflation-adjusted returns over any rolling 10-year period.

ISA vs Pension — Which Comes First?

For most employed people, the priority order is:

1. Employer pension match — never leave free employer contributions unclaimed.
2. ISA — flexible access, no lifetime limit, no tax on withdrawal.
3. Additional pension contributions — tax relief is valuable but inaccessible until age 57.

ISAs are particularly valuable if you plan to retire early (before pension access age) or want savings you can access for house deposit, sabbaticals, or other medium-term goals.

ISA Allowance Comparison Table