ISA Allowance Explained

What is an ISA?

An Individual Savings Account (ISA) is a tax-efficient wrapper for savings and investments in the UK. Interest, dividends and capital gains inside an ISA are generally free from income tax and capital gains tax.

You must be a UK resident aged 16+ for Cash ISAs (18+ for Stocks & Shares and Lifetime ISAs) to open one.

The £20,000 annual allowance

Each tax year (6 April to 5 April), you can pay up to £20,000 into ISAs in total across all types. You can split this between Cash, Stocks & Shares, Innovative Finance and Lifetime ISAs, subject to sub-limits.

Unused allowance does not roll over — if you do not use it in a tax year, it is gone. The allowance resets each 6 April.

Types of ISA

Cash ISAs work like tax-free savings accounts. Stocks & Shares ISAs hold investments — values can go down as well as up. Lifetime ISAs (LISAs) are for first-home purchase or retirement, with a £4,000 annual sub-limit and a 25% government bonus on contributions.

• Cash ISA — savings interest, low risk
• Stocks & Shares ISA — investments, higher risk and potential return
• Lifetime ISA — £4,000/year max, 25% bonus, strict withdrawal rules
• Junior ISA — separate £9,000 allowance for children

Transfers and planning

You can transfer ISAs between providers without losing tax-free status, but follow the official transfer process — do not withdraw and re-deposit manually.

Use our ISA allowance calculator to see how much of your £20,000 limit remains this tax year after contributions you have already made.