The £20,000 allowance
You can pay up to £20,000 into ISAs in the 2026/27 tax year — that’s the total across all your ISAs combined, not per account. Key points:
- It’s “use it or lose it” — the allowance resets every 6 April and doesn’t carry over.
- The Lifetime ISA has its own cap of £4,000, which counts towards the £20,000.
- Money already in ISAs from previous years doesn’t count towards this year’s allowance — and neither does the interest or growth on it.
Why it matters nowWith the Personal Savings Allowance, dividend allowance and Capital Gains allowance all cut or frozen, more ordinary savers now pay tax outside an ISA. Inside one, the returns stay tax-free — and you never have to declare them.
The four types
| Type | Best for |
|---|
| Cash ISA | Safe, tax-free savings — like a savings account with no tax on the interest |
| Stocks & shares ISA | Longer-term investing — no tax on dividends or capital gains (value can go down as well as up) |
| Innovative finance ISA | Peer-to-peer lending — higher potential returns, higher risk, not FSCS-protected in the same way |
| Lifetime ISA | A first home or retirement — a 25% government bonus on up to £4,000/yr (see our guide) |
You can split your £20,000 across different types in the same year — for example some in a cash ISA and some in a stocks and shares ISA.
Why they’re tax-free
Inside an ISA, none of the following is taxed:
You don’t declare any of it on a tax return. That’s the whole point of the “wrapper” — it keeps your returns out of tax for as long as they stay inside.
More than one ISA
Since April 2024, you can pay into more than one ISA of the same type in the same tax year (for example two different cash ISAs), as well as different types — as long as your total payments stay within £20,000. You can also hold ISAs from previous years with many different providers.
Who can open oneYou must be 18 or over and a UK resident (or an armed-forces/Crown servant abroad). A Lifetime ISA also requires you to be under 40 to open. ISAs can’t be held jointly. For under-18s there’s a separate Junior ISA.
Moving an ISA — transfer, don’t withdraw
Want a better rate, or to switch from cash to stocks and shares? Ask the new provider to arrange a transfer — don’t take the money out yourself.
The costly mistakeIf you withdraw ISA money and re-deposit it, it counts as a new payment against this year’s allowance and loses the tax-free wrapper on that money. A proper transfer keeps all the tax benefits and doesn’t use your £20,000 allowance. You can transfer current-year and previous-year money, and switch between types.
Do this now
If you have savings earning taxable interest outside an ISA, or investments exposed to dividend or capital gains tax, consider moving them into your £20,000 ISA allowance before 5 April — it resets and can’t be carried over. Compare rates, and always transfer rather than withdraw.
Saving for a first home or retirement? The Lifetime ISA adds a 25% bonus. Check whether you even owe tax on savings outside an ISA in our tax on savings guide.
Related guides — money & tax
Source verification
Primary source: GOV.UK / HMRC — Individual Savings Accounts (ISAs): Overview and How ISAs work (
gov.uk/individual-savings-accounts, GOV.UK-updated 6 April 2026). Last verified 2 July 2026 — the £20,000 allowance for 2026/27, the four types (cash, stocks and shares, innovative finance, Lifetime), the Lifetime ISA £4,000 sub-limit, the 18+ (and under-40 for a Lifetime ISA) eligibility, UK-residence requirement, that ISAs can’t be held jointly and that under-18s use a Junior ISA, the tax-free treatment of interest/dividends/gains, the April 2024 change allowing multiple ISAs of the same type in a year, and the transfer-don’t-withdraw rule were web-checked against GOV.UK. Confidence: High — published HMRC allowance and rules; note the ISA allowance and rules are set by the government and can change at a Budget. Scope: UK-wide. Not financial advice — whether a cash or investment ISA suits you depends on your goals and timeframe; MoneyHelper or an adviser can help.
ISAs — common questions
What is an ISA?
A savings or investment account where interest, dividends and gains are tax-free. Every UK adult gets a £20,000 allowance each year across four types: cash, stocks and shares, innovative finance and Lifetime ISAs.
How much can I put in?
£20,000 across all your ISAs in 2026/27 (the Lifetime ISA caps at £4,000 of that). It resets each 6 April and doesn’t carry over. Previous-year ISA money and its growth don’t count.
Are ISAs really tax-free?
Yes — no tax on cash-ISA interest or on dividends and capital gains in a stocks and shares ISA, and they don’t use your other allowances. You don’t declare ISA income on a tax return.
Can I have more than one?
Since April 2024 you can pay into more than one ISA of the same type in a year, plus different types, as long as the total stays within £20,000. You can hold older ISAs with many providers too.
How do I move an ISA?
Use the new provider’s transfer process — don’t withdraw the money, or it loses the tax-free status and uses your allowance again. Transfers don’t count towards the £20,000.