ISA Allowance 2026/27: How to Use Your £20,000 Tax-Free Limit
Quick answer
Your ISA allowance 2026/27 is £20,000 per person. Here's how to split it across ISA types, use the LISA bonus, and grow your money completely tax-free.
Your ISA allowance 2026/27 is £20,000 per person – the total you can pay into Individual Savings Accounts (ISAs) in the tax year that runs from 6 April 2026 to 5 April 2027. Money held inside an ISA grows free of Income Tax on interest and dividends, and free of Capital Gains Tax. This guide explains how the limit works, how to split it sensibly, and how to make sure none of it goes to waste.
What is the ISA allowance for 2026/27?
The ISA allowance is the maximum you can contribute across all your ISAs in a single tax year. For 2026/27 it is £20,000 per person. That figure is per individual, not per account – so a couple could shelter up to £40,000 between them by each using their own allowance.
The key benefit is simple: anything you earn inside an ISA is yours to keep. Interest, dividends and investment growth are all tax-free, and you don't have to declare any of it on a Self Assessment tax return. That makes ISAs one of the most straightforward ways to protect your savings and investments from tax.
"Use it or lose it": the allowance resets every 6 April
The allowance refreshes at the start of each tax year on 6 April. Crucially, it cannot be carried forward. If you only pay in £12,000 during 2026/27, the remaining £8,000 of allowance disappears on 6 April 2027 – you don't get to add it to next year's limit.
Tip: If you have spare cash near the end of the tax year, paying it into an ISA before 5 April lets you lock in that year's allowance. You can always choose your investments later – the important thing is getting the money inside the ISA wrapper in time.
This "use it or lose it" rule is why many people top up their ISA towards the end of the tax year, and why spreading contributions across the year can help you avoid a last-minute rush. A regular savings calculator can show how steady monthly contributions add up over the year.
Splitting your £20,000 across different ISA types
You don't have to put the whole allowance into one account. You can spread your £20,000 across several ISA types in the same tax year, as long as the combined total stays within the limit. The main types are:
- Cash ISA – works like a tax-free savings account, paying interest with no risk to your capital.
- Stocks & Shares ISA – holds investments such as funds and shares; growth and dividends are tax-free, but the value can fall as well as rise.
- Innovative Finance ISA – holds peer-to-peer loans and similar investments within the tax-free wrapper.
- Lifetime ISA (LISA) – designed for a first home or retirement, with a government bonus (see below).
| ISA type | Holds | Best for |
|---|---|---|
| Cash ISA | Cash savings earning interest | Short-term, low-risk savings |
| Stocks & Shares ISA | Funds, shares, bonds | Longer-term growth |
| Innovative Finance ISA | Peer-to-peer loans | Higher-risk income seekers |
| Lifetime ISA | Cash or investments | First home or retirement |
You can use our ISA calculator to see how splitting your allowance and projecting growth over time could work for your goals. If you favour a Stocks & Shares ISA, an investment calculator can model how your contributions might grow over the long term.
The Lifetime ISA and its 25% bonus
The Lifetime ISA is a special case. You can pay in up to £4,000 a year, and this counts towards your overall £20,000 allowance – so paying the maximum into a LISA leaves £16,000 for your other ISAs. On top of your contributions, the government adds a 25% bonus, which means up to £1,000 of free money each year if you pay in the full £4,000.
A LISA is intended for two specific purposes: buying your first home or saving for retirement. If you're putting money aside for a property deposit, our guide to stamp duty for first-time buyers explains the costs you'll meet when you buy. Age rules apply to opening and paying into one, and withdrawal charges can apply if you take money out for any other reason, so it suits people who are confident the money is earmarked for one of those goals. Retirement savers may also want to compare ISAs with pension tax relief.
ISAs for children: the Junior ISA
If you're saving for someone under 18, the Junior ISA has its own separate, lower annual allowance. It sits outside your own £20,000 adult allowance, so paying into a child's Junior ISA does not use up any of your personal limit. The money belongs to the child and is locked away until they turn 18. A compound interest calculator can show how those long-locked contributions could grow before the child reaches 18.
Why ISAs matter: the Personal Savings Allowance
Outside an ISA, the Personal Savings Allowance (PSA) lets you earn some savings interest tax-free before you owe anything. How much depends on your Income Tax band:
| Tax band | Tax-free savings interest (PSA) |
|---|---|
| Basic rate | £1,000 |
| Higher rate | £500 |
| Additional rate | £0 |
This is why ISAs matter most for people with larger savings or higher incomes. If your interest already uses up the PSA – or you're an additional-rate taxpayer with no allowance at all – an ISA shelters the rest from tax entirely. Try our savings calculator to estimate the interest you might earn and whether it could push you past the PSA, or use the Personal Savings Allowance calculator to check how much of your interest stays tax-free.
Worked example: a Stocks & Shares ISA
Suppose you pay the full £20,000 into a Stocks & Shares ISA during 2026/27. Over the following years, that money grows and pays dividends. Because it all sits inside the ISA wrapper:
- Any growth in the value of your investments is free of Capital Gains Tax.
- Any dividends paid out are free of Income Tax.
- There is nothing to report on a tax return – the gains and income are simply not taxable.
Compare that with holding the same investments outside an ISA, where dividends above your allowances and gains above the CGT exemption could be taxable. Over many years, sheltering investments in an ISA can make a meaningful difference to what you keep.
Common ISA mistakes to avoid
ISAs are simple in principle, but a few avoidable errors stop people getting the full benefit of the £20,000 allowance. Knowing them in advance helps you make the most of each tax year.
- Leaving the top-up too late. Because the allowance cannot be carried forward, waiting until the final days before 5 April risks a payment not clearing in time. Spreading contributions through the year removes that pressure.
- Withdrawing without a flexible ISA. Some ISAs are "flexible", letting you withdraw and replace money in the same tax year without losing allowance; many are not. Taking money out of a non-flexible ISA permanently uses up that slice of your allowance.
- Forgetting the Lifetime ISA counts towards the total. The £4,000 you can pay into a Lifetime ISA is part of your overall £20,000, not on top of it. Paying the maximum into a LISA leaves £16,000 for your other ISAs.
- Holding too much cash for a long-term goal. A Cash ISA is ideal for short-term, low-risk savings, but over many years inflation can erode its real value. For longer goals, a Stocks & Shares ISA may suit better - though its value can fall as well as rise.
- Triggering Lifetime ISA withdrawal charges. Taking money out of a LISA for anything other than a first home or retirement can mean a withdrawal charge that claws back more than the bonus added.
If a Lifetime ISA is part of your plan, the Lifetime ISA calculator shows how the 25% bonus builds up alongside your contributions.
How to decide: Cash ISA or Stocks & Shares ISA?
The most common decision savers face is how to split the allowance between cash and investments. There is no single right answer, but a few questions usually point the way.
When do you need the money? If you might need it within a few years - for a house deposit, a wedding or an emergency fund - a Cash ISA protects the capital and pays interest tax-free. If the goal is a decade or more away, a Stocks & Shares ISA gives growth a chance to outpace inflation, accepting that values move up and down along the way.
How would a fall in value feel? Investments can drop sharply in the short term. If that would tempt you to sell at the wrong moment, a larger cash holding may suit your temperament better, even if the long-run returns are likely lower.
Are you already paying tax on savings interest? If your interest outside an ISA exceeds the Personal Savings Allowance, sheltering cash inside a Cash ISA stops that excess being taxed. Higher and additional-rate taxpayers reach that point faster, so the ISA shelter matters more to them. The savings interest tax calculator shows how much of your interest would otherwise be taxable.
Many people use a mix: a slug of cash for near-term needs and security, and the rest invested for long-term growth. The beauty of the £20,000 allowance is that you can spread it across both in the same tax year. Our ISA calculator lets you model different splits and see how each could grow over time.
Frequently asked questions
What is the ISA allowance for 2026/27?
It is £20,000 per person for the tax year running from 6 April 2026 to 5 April 2027. This is the total you can pay across all your ISAs combined.
Can I carry over unused ISA allowance to next year?
No. The allowance is "use it or lose it". It resets on 6 April each year, and any unused portion cannot be carried forward.
Can I pay into more than one type of ISA in the same year?
Yes. You can split your £20,000 across a Cash ISA, Stocks & Shares ISA, Innovative Finance ISA and Lifetime ISA in the same tax year, provided the total doesn't exceed £20,000.
How much can I pay into a Lifetime ISA?
Up to £4,000 a year, which counts towards your overall £20,000 allowance. The government adds a 25% bonus on top, and the money is for a first home or retirement, with age rules and withdrawal charges applying.
Do I need to declare ISA interest or gains on my tax return?
No. Interest, dividends and capital gains inside an ISA are completely tax-free, so there is nothing to report on a Self Assessment return.
Are ISAs worth it if I don't pay much tax on savings?
The Personal Savings Allowance already covers £1,000 of interest for basic-rate taxpayers and £500 for higher-rate taxpayers. ISAs matter most once your savings or income are large enough to exceed those allowances, or if you're an additional-rate taxpayer with no PSA.
Related calculators
Plan your tax-free saving with our ISA calculator, savings calculator and compound interest calculator.
This guide is general information for the 2026/27 tax year, not personal financial advice. Check your own circumstances at gov.uk.
Related: how many ISAs can you have? The post-2024 rules explained.
Written by
Laura Michelle Davis — Chartered Tax Adviser (CTA)
ACCA · CTA (Chartered Tax Adviser) · ATT · BSc Economics, UC Berkeley
Laura Michelle Davis is a Chartered Tax Adviser (CTA) who also holds the ACCA and ATT qualifications and a BSc in Economics from UC Berkeley. She specialises in UK personal tax, covering income tax, National Insurance, self-employment and capital gains, and has built her career making complicated rules easy to follow. At TaxFly, Laura writes and edits the tax guides and explainers, checking that figures reflect current HMRC rates and that every explanation answers the question a real person is actually asking. Her goal is plain-English clarity you can trust and act on.
