An ISA (Individual Savings Account) is a savings or investment account where you don't pay tax on the interest, dividends or capital gains you earn. Every UK resident aged 18 or over gets an annual ISA allowance — £20,000 in the 2026/27 tax year — that you can put into ISAs each year. There are four types: cash ISA, stocks and shares ISA, innovative finance ISA and the Lifetime ISA. You can split your £20,000 across different types in a year, as long as the total doesn't go over £20,000.

How much can I put in an ISA?

The ISA allowance for the 2026/27 tax year is £20,000. That's the most you can pay in across all your ISAs combined in the year. The Lifetime ISA has its own lower limit of £4,000, which counts towards the £20,000. The allowance is 'use it or lose it' — it resets each 6 April and doesn't carry over. Money that's already sitting in ISAs from previous years doesn't count towards this year's allowance, and neither does growth or interest on it.

Can I have more than one ISA?

Yes. 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 — provided your total payments across all of them stay within the £20,000 allowance. The Lifetime ISA still has its own rules. You can also hold ISAs from previous years with lots of different providers. If you want to move an existing ISA to a better rate, use the provider's transfer process rather than withdrawing the money.

ISAs explained: the £20,000 allowance

Q: Are ISAs really tax-free?

Yes. Interest in a cash ISA is tax-free, and dividends and capital gains in a stocks and shares ISA are tax-free — and they don't use up your Personal Savings Allowance, dividend allowance or Capital Gains allowance. That's the main advantage: as frozen tax allowances catch more people, sheltering savings and investments in an ISA keeps the returns out of tax. You don't even have to declare ISA income on a tax return.

Q: How do I transfer an ISA?

To move an ISA to a new provider (for a better rate or to switch type), ask the new provider to arrange a transfer — don't withdraw the money yourself, because taking it out and re-depositing 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. You can transfer current-year and previous-year money, and switch between cash and stocks and shares ISAs. Transfers don't count towards your £20,000 allowance.

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.

Coming change — announced, not yet in forceFrom 6 April 2027, the amount you can put into a cash ISA is due to drop to £12,000 a year for people under 65 (those aged 65 and over keep the full £20,000 cash limit). The overall £20,000 ISA allowance is unchanged — so you would still be able to use the balance in a stocks and shares ISA. A 22% charge is also due to apply to interest on cash held inside a stocks and shares ISA. Announced at the Autumn Budget 2025; none of this applies yet — for 2026/27 the full £20,000 can still go into cash. Confirm the detail on GOV.UK before making plans, and use MoneyHelper for free, impartial guidance — this is information, not financial advice.

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:

Interest on a cash ISA,
Dividends on shares in a stocks and shares ISA (they don’t use your £500 dividend allowance), and
Capital gains when investments grow (no Capital Gains Tax).

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

Lifetime ISA Tax on savings Dividend tax Capital Gains Tax Help to Save Premium Bonds

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. Coming change (12 July 2026): the announced ISA reform from 6 April 2027 — a £12,000 cash ISA subscription limit for under-65s (65+ keep £20,000), the overall £20,000 allowance unchanged, and a 22% charge on interest on cash held in a stocks and shares ISA — is taken from the GOV.UK ISA reform 2027 factsheet (Autumn Budget 2025). Flagged as announced, not yet in force; detailed rules follow in legislation. 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.

Sources: The allowance, types, eligibility and transfers · GOV.UK — Individual Savings Accounts (ISAs). SortedUK is not a regulated adviser and this is general information. Last reviewed: 2 July 2026.

ISAs — £20,000 a year, completely tax-free