An ISA (Individual Savings Account) is a tax-free wrapper for your savings and investments. “Wrapper” is the key word: an ISA isn’t an investment itself. It’s a box you put cash or investments into, and anything that grows inside the box is protected from UK tax.
That means no Income Tax on interest, no tax on dividends and no Capital Gains Tax on profits, for as long as the money stays in the ISA. You don’t even need to mention it on a tax return.
Figures checked: 18 October 2026, for the 2026/27 tax year (6 April 2026 to 5 April 2027), from GOV.UK. Tax rules can change, so always double-check the latest figures.
How much can I put in?
Each tax year you can pay in up to £20,000 in total, across all your ISAs. The government has said this overall limit will stay at £20,000 until April 2031.
You can split it however you like, for example £5,000 in a Cash ISA and £15,000 in a Stocks & Shares ISA. Since April 2024 you can also pay into more than one ISA of the same type in the same year.
The allowance is “use it or lose it”: anything you don’t use by 5 April doesn’t roll over.
Who can open one?
- You must be 18 or over (and under 40 to open a Lifetime ISA).
- You must be UK resident (or a Crown servant or in the armed forces, or their spouse/civil partner).
- ISAs are individual, so you can’t hold one jointly.
The main types of ISA
| Type | What’s inside | Yearly limit (2026/27) | Good for |
|---|---|---|---|
| Cash ISA | Savings that earn interest | Up to £20,000 | Short-term savings and emergency pots |
| Stocks & Shares ISA | Funds, shares, bonds, ETFs | Up to £20,000 | Long-term investing (5+ years) |
| Lifetime ISA (LISA) | Cash or investments | £4,000 (counts towards the £20,000) | First home or retirement, with a 25% bonus |
| Innovative Finance ISA | Peer-to-peer loans | Up to £20,000 | Higher-risk lending (not covered here) |
Cash ISA
Works like a normal savings account, except the interest is tax-free. Your money is safe from market falls, and eligible deposits are protected by the FSCS up to £120,000 per person per banking group. The trade-off: over long periods, cash has historically grown more slowly than investments and can lose value after inflation.
Stocks & Shares ISA
Lets you invest in funds, shares and other investments. Over the long term this has historically beaten cash, but the value can go down as well as up, and you might get back less than you put in. It’s generally best for money you won’t need for at least five years.
Lifetime ISA (LISA)
For buying your first home (worth up to £450,000) or for later life (from age 60).
- Open it between 18 and 39; pay in until you’re 50.
- Up to £4,000 a year, and the government adds a 25% bonus, worth up to £1,000 a year free.
- If you withdraw for any other reason, there’s a 25% withdrawal charge, which means you lose a bit more than the bonus.
Changes coming in April 2027
The government has confirmed that from 6 April 2027, people under 65 will only be able to put £12,000 a year into Cash ISAs. The overall limit stays at £20,000, so the other £8,000 could still go into a Stocks & Shares ISA. People aged 65 and over will keep the full £20,000 cash limit. (GOV.UK, Cash ISA limit reduction)
There will also be new rules stopping transfers from Stocks & Shares ISAs into Cash ISAs for under-65s. The government has also said it will consult on a new first-time-buyer product to sit alongside or replace the Lifetime ISA over time.
Quick tips
- Check fees. Platform and fund fees can quietly eat into returns over many years.
- Transfer, don’t withdraw. If you move an ISA, use your new provider’s transfer service so it keeps its tax-free status.
- Start small. Many platforms let you invest from £25 a month.
- Think long term. Time in the market matters (see how compounding works).
This guide is general information, not financial advice. Tax treatment depends on your individual circumstances and may change in future.