ISA Allowance 2026/27 — Types, Limits and Rules Explained
🧮 Calculate your ISA growth →The ISA — Individual Savings Account — is the cornerstone of tax-efficient saving in the UK. Every penny of interest, dividends and capital gains inside an ISA is completely free of Income Tax and Capital Gains Tax, forever. The annual allowance for 2026/27 remains at £20,000.
With savings rates still elevated and the stock market accessible through low-cost index funds, making full use of your ISA allowance is one of the best financial decisions most UK savers can make. Here is everything you need to know.
The four types of adult ISA
There are four types of ISA available to UK adults. You can open and pay into one of each type in a single tax year, as long as your total contributions do not exceed £20,000.
| ISA Type | Annual Limit | Best For | Key Restriction |
|---|---|---|---|
| Cash ISA | Up to £20,000 | Short-term savings, emergency fund | Interest rates vary; shop around |
| Stocks & Shares ISA | Up to £20,000 | Long-term growth (5+ years) | Investment value can fall |
| Lifetime ISA (LISA) | Up to £4,000 | First home purchase or retirement | Age 18–39; 25% penalty on other withdrawals |
| Innovative Finance ISA | Up to £20,000 | Peer-to-peer lending returns | Higher risk; not FSCS protected |
The Lifetime ISA — the 25% bonus explained
The Lifetime ISA offers a government bonus of 25% on contributions, up to £4,000 per year — meaning a maximum bonus of £1,000 per tax year. Over a decade of full contributions, that is £10,000 in free government money.
To qualify you must be aged 18–39 when you open the account. You can use the funds (including the bonus) to buy your first home (property price must be £450,000 or under) or to fund retirement from age 60. Withdraw for any other reason and you pay a 25% withdrawal charge — which effectively claws back the bonus and then some.
Splitting your £20,000 allowance
Since April 2024 you can pay into multiple ISAs of the same type with different providers in the same tax year (previously you could only use one of each type per year). The only rule is that your total contributions across all ISAs must not exceed £20,000.
| Example Allocation | Amount |
|---|---|
| Lifetime ISA (first home) | £4,000 |
| Stocks & Shares ISA | £12,000 |
| Cash ISA (emergency fund top-up) | £4,000 |
| Total | £20,000 ✓ |
Junior ISA — saving for children
The Junior ISA allowance for 2026/27 is £9,000 per child. This is completely separate from the adult £20,000 limit — contributing to a child's Junior ISA does not reduce your own allowance.
Junior ISA funds are locked until the child turns 18, when the account automatically converts to an adult ISA. You can choose between a Cash Junior ISA or a Stocks & Shares Junior ISA (or split between both). The long time horizon makes a Stocks & Shares Junior ISA particularly well-suited to young children.
ISA rules you need to know
- Use it or lose it — the allowance does not roll over. Any unused allowance from 2025/26 is gone on 6 April 2026.
- No CGT or Income Tax — gains, dividends and interest inside an ISA are never taxable, even when withdrawn.
- Flexible ISAs — some Cash ISAs are "flexible", meaning you can withdraw and replace funds within the same tax year without it counting as a new contribution.
- Transferring — you can transfer ISAs between providers without losing the tax-free status. Always use the official transfer process — never withdraw and redeposit.
- Death — on death, the ISA becomes an APS (Additional Permitted Subscription), allowing a spouse or civil partner to inherit the tax-free wrapper.
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