An Individual Savings Account is a wrapper that keeps the taxman out of your savings and investments. Interest, dividends and capital gains earned inside an ISA are free of UK tax, and you never have to declare them. For the 2026/27 tax year the amount you can pay in is £20,000, the same figure that has applied since April 2017. What is new is a change now confirmed for April 2027, which will cap how much of that £20,000 can go into cash for most savers. This guide sets out the current limits, the account types and the arithmetic you need before the deadline.
What the ISA allowance actually covers
The £20,000 is a yearly ceiling on new money paid in, not a limit on what an account can hold. A pot that has grown to £60,000 over several years is fine; the rule only governs fresh contributions in a single tax year. The year runs from 6 April to 5 April, and the allowance does not roll over. Anything you fail to use by 5 April is gone, so the account is a use-it-or-lose-it benefit rather than a bank of unused headroom.
You can spread the £20,000 across more than one type of ISA in the same year, in any split you like, as long as the combined payments stay within the limit. Since April 2024 you have also been able to pay into more than one ISA of the same type in a year, so two cash ISAs with different banks are allowed provided the total respects the £20,000. The one figure to watch is the sum of everything new, across every account.
The account types and their limits
For 2026/27 the GOV.UK ISA guidance lists four adult wrappers plus a separate children’s account:
- Cash ISA. A tax-free savings account paying interest, with no risk to the capital. Good for money you may need soon or cannot afford to see fall.
- Stocks and Shares ISA. Holds funds, shares and bonds. Returns are not guaranteed and the value can drop, but over long horizons this is where most tax-free growth is built.
- Innovative Finance ISA. Holds peer-to-peer loans. Higher risk, smaller market, and outside the Financial Services Compensation Scheme protection that covers cash.
- Lifetime ISA. A hybrid for a first home or retirement, with a government top-up (see below). Its £4,000 yearly cap sits inside the £20,000, not on top of it.
- Junior ISA. For under-18s, with its own £9,000 allowance that is completely separate from the adult £20,000.
Quick reference: 2026/27 limits
| Account | 2026/27 limit | Counts toward the £20,000? |
|---|---|---|
| Cash ISA | £20,000 (full allowance) | Yes |
| Stocks and Shares ISA | £20,000 (full allowance) | Yes |
| Innovative Finance ISA | £20,000 (full allowance) | Yes |
| Lifetime ISA | £4,000 (plus 25% bonus) | Yes, sits inside the £20,000 |
| Junior ISA (under-18s) | £9,000 | No, a separate allowance |
The Lifetime ISA and its 25% bonus
The Lifetime ISA rewards a narrow goal with real money. You can pay in up to £4,000 a year and the government adds a 25% bonus, worth up to £1,000 annually, paid monthly. That £4,000 counts towards your overall £20,000, so a full Lifetime ISA leaves £16,000 for other wrappers.
The strings are strict. You must open the account between the ages of 18 and 39, and you can keep paying in until you turn 50. The tax-free bonus is only kept if the money buys a first home costing £450,000 or less, or is withdrawn from age 60, or on terminal illness. Take it out for any other reason and you pay a 25% withdrawal charge, which claws back the bonus and a slice of your own money on top. Those rules come straight from the Lifetime ISA pages on GOV.UK.
The change coming in April 2027
This is the reason 2026/27 matters. Under the ISA reform confirmed for 6 April 2027, the amount you can put into a cash ISA each year falls to £12,000 for savers under 65, while the full £20,000 allowance stays in place for Stocks and Shares and other non-cash ISAs. Savers aged 65 and over keep the full £20,000 cash limit from the start of the tax year in which they turn 65. The government’s stated aim is to nudge more long-term money into investments rather than deposit accounts. The detail is set out in the ISA reform 2027 factsheet.
The practical point: 2026/27 is the last tax year in which a saver under 65 can shelter the whole £20,000 in cash. If protecting a large cash balance from tax matters to you, using this year’s allowance in full before 5 April 2027 locks in a higher cash limit than next year will offer. Money already inside a cash ISA is not affected; the cut applies only to new contributions from April 2027.
A worked split
Say you have £20,000 to shelter in 2026/27 and want a mix. You could put £4,000 into a Lifetime ISA (turning it into £5,000 with the bonus), £10,000 into a cash ISA for near-term security, and the remaining £6,000 into a Stocks and Shares ISA for growth. Total new money: £20,000, all within the allowance, with £1,000 of free government cash on top of it. To see how the invested portion might grow, run the figures through the compound interest calculator, and to plan a target such as a house deposit, the savings goal calculator shows how long regular payments take to get there.
Why the wrapper still beats a normal account
A Personal Savings Allowance already lets a basic-rate taxpayer earn £1,000 of interest tax-free outside an ISA (£500 for higher-rate payers, nil for additional-rate). That leads some people to ask whether an ISA is worth the effort. Two answers: rates have risen enough that a modest cash balance can breach the Personal Savings Allowance and start being taxed, and the ISA shelters dividends and capital gains too, where the tax-free thresholds outside a wrapper have been cut sharply. For anyone building a long-term pot, keeping growth permanently outside the tax system is worth more each year the balance compounds. The retirement savings calculator shows how that tax-free compounding stacks up over decades, and the percentage calculator helps check any bonus or interest figure in seconds.
FAQ
What is the ISA allowance for the 2026/27 tax year?
It is £20,000. That is the maximum new money you can pay across all your adult ISAs between 6 April 2026 and 5 April 2027. The limit has been £20,000 every year since April 2017.
Can I split the allowance between different ISAs?
Yes. You can divide the £20,000 across a cash ISA, a Stocks and Shares ISA, an Innovative Finance ISA and a Lifetime ISA in any proportion, and since April 2024 you can even pay into two of the same type, as long as the combined new money stays at or below £20,000.
Does the allowance carry over if I do not use it?
No. Each tax year is separate. Whatever part of the £20,000 you do not use by 5 April is lost, and you start the next year with a fresh £20,000. There is no way to bank unused allowance.
How does the Lifetime ISA bonus work?
You can pay up to £4,000 a year into a Lifetime ISA and the government adds 25%, up to £1,000 a year. The £4,000 counts inside your £20,000 limit. The bonus is only kept if you buy a first home worth £450,000 or less, wait until age 60, or become terminally ill; otherwise a 25% withdrawal charge applies.
What is changing about cash ISAs in April 2027?
From 6 April 2027 the yearly cash ISA limit drops to £12,000 for savers under 65, while the overall ISA allowance stays at £20,000 and the non-cash limit is unchanged. Savers aged 65 and over keep the full £20,000 cash limit. So 2026/27 is the last year an under-65 can put the whole £20,000 into cash.
Is the Junior ISA allowance part of the £20,000?
No. A Junior ISA has its own £9,000 yearly allowance for the 2026/27 tax year, separate from the adult £20,000. A parent can fund a child’s Junior ISA up to £9,000 and still use their own £20,000 in full.
Sources
- GOV.UK, Individual Savings Accounts (ISAs): overview.
- GOV.UK, Lifetime ISA.
- GOV.UK, Junior Individual Savings Accounts (ISA).
- HM Treasury, ISA reform 2027: anti-circumvention rules factsheet.