You can pay up to £20,000 into ISAs in the 2026/27 tax year, and every penny of interest, dividends and growth inside that wrapper is tax-free. The allowance runs from 6 April 2026 to 5 April 2027. It's a single limit shared across all your adult ISAs.
That £20,000 figure hasn't budged. The Government has kept the main ISA landscape broadly frozen for 2026/27, so the headline number is the same as last year. What has changed is the world around it.
With the dividend allowance and capital gains tax allowance both slashed in recent years, sheltering money inside an ISA matters more than ever. Below is how the allowance works, the five types on offer, and the traps worth avoiding.
The £20,000 ISA allowance explained
Your annual ISA allowance is £20,000 across all the adult ISAs you hold. You can put the whole lot in one ISA, or spread it across several. HMRC treats it as one shared pot, not £20,000 per account.
The allowance is "use it or lose it". Any unused portion doesn't roll over — on 6 April it simply resets to a fresh £20,000. You can't carry forward last year's gap the way you can with pensions.
Since April 2024 you've been able to pay into more than one ISA of the same type in a single year. So you could open two Cash ISAs with different providers, as long as your total stays within £20,000.
The five types of ISA
There are five ISAs to choose from, and you can mix them however you like within the overall limit.
- Cash ISA — a savings account where interest is tax-free. Ideal for an emergency fund or short-term goals.
- Stocks & Shares ISA — holds funds, shares and bonds. Growth and dividends are shielded from tax, though the value can fall as well as rise.
- Lifetime ISA (LISA) — for a first home or retirement, with a Government bonus (more below).
- Innovative Finance ISA — wraps peer-to-peer loans. Higher potential returns, higher risk, and your capital is not FSCS-protected.
- Junior ISA — a tax-free account for under-18s with its own separate allowance.
The Lifetime ISA and its 25% bonus
The Lifetime ISA has its own catch worth knowing. You can pay in up to £4,000 a year, and this counts towards your overall £20,000 allowance — it isn't extra.
The Government then adds a 25% bonus, so £4,000 becomes £5,000. That's up to £1,000 of free money each year, paid monthly.
You must be 18 to 39 to open one. The money is meant for a first home worth up to £450,000, or for retirement from age 60. Withdraw it for anything else and you'll usually pay a 25% penalty, which can leave you with less than you put in.
The Junior ISA allowance
The Junior ISA sits apart from your adult allowance. A parent or guardian can pay in up to £9,000 per child in 2026/27, in either a Cash or Stocks & Shares Junior ISA.
The money belongs to the child and is locked away until they turn 18. At that point it automatically becomes an adult ISA in their name.
Flexible ISAs and how transfers work
Some Cash ISAs are "flexible". That means you can take money out and put it back in the same tax year without it eating into your allowance — handy if you dip into savings and top them up later. Not every provider offers this, so check first.
Transfers are where people trip up. If you want to move an existing ISA to a new provider, never withdraw the cash and re-deposit it. Doing so strips away the tax-free status and uses up fresh allowance.
Instead, ask the new provider to arrange an ISA transfer directly. Your existing balances keep their protection, and previous years' money doesn't count against this year's £20,000.
Why ISAs matter more in 2026/27
ISAs shield three things from tax: interest, dividends and capital gains. As allowances outside the wrapper have shrunk, that shelter has quietly become far more valuable.
The dividend allowance is now just £500, down from £5,000 a few years ago. The capital gains tax annual exempt amount has fallen to £3,000. Breach either and you face a tax bill — unless the assets sit inside an ISA.
Plenty of ordinary savers now pay tax on interest too, thanks to higher rates. According to HMRC ISA statistics, around 12.4 million adult ISAs were subscribed to in 2022/23, which shows how mainstream the wrapper has become. Sheltering your savings is no longer just for the wealthy.
Making the most of your allowance
A few practical habits go a long way. Try to use as much of the £20,000 as you can before 5 April, because unused allowance vanishes.
If you're saving for a first home and you're under 40, the Lifetime ISA bonus is hard to beat. For long-term growth, a Stocks & Shares ISA has historically outpaced cash, provided you can leave it invested for five years or more.
And if money is tight, even small monthly contributions add up. You don't need a spare £20,000 to benefit — you just need to start.
Want to see how your contributions could grow tax-free over time? Use our ISA Calculator to model your savings, compare Cash and Stocks & Shares returns, and check the Lifetime ISA bonus in seconds.
This article is for general information only and is not financial advice. Figures are based on 2026/27 rules and may change.