An ISA (Individual Savings Account) is a tax-free wrapper for savings or investments in the UK. Interest, dividends, and capital gains earned inside an ISA are free from UK tax. ISAs are flexible and come in different types so you can match the account to your goals and risk level.

How Much Can You Put in an ISA?

For the 2025/26 tax year, the adult ISA allowance is:

• £20,000 per person (age 16+ for Cash ISAs, 18+ for other adult ISAs)

You can split this across different ISA types. You can only pay into one of each type per tax year, but you may hold multiple ISAs opened in previous years.

Types of ISA

Here is a quick overview with links to detailed guides:

• Cash ISA - Savings account with tax-free interest. Lower risk.
• Stocks & Shares ISA - Invest in funds, shares, bonds, and trusts. Higher growth potential with risk.
• Lifetime ISA (LISA) - Save for a first home or retirement with a 25% government bonus. Rules and withdrawal penalties apply.
• Innovative Finance ISA - Peer to peer lending and similar. Higher risk and not FSCS protected.
• Junior ISA - Tax-free account for children under 18. Annual allowance is separate from the adult limit.

Who Can Open an ISA?

• UK resident for tax purposes
• Age 16 or over for a Cash ISA
• Age 18 or over for Stocks & Shares, Innovative Finance, or Lifetime ISA
• Under 40 to open a Lifetime ISA (you can contribute until age 50)

Why Use an ISA?

• Tax-free growth - no income tax or capital gains tax inside the wrapper
• No declarations - ISA income does not need to be listed on a tax return
• Choice - from low risk cash to higher growth investments

Access and Withdrawals

Access depends on account type and provider. Easy access Cash ISAs allow withdrawals at any time, fixed rate Cash ISAs may charge penalties, and Stocks & Shares ISAs can be sold and withdrawn when markets are open. Lifetime ISAs have strict rules and a 25% withdrawal charge for non-qualifying uses.

Flexible ISAs Explained

Some providers offer a Flexible ISA. With flexibility, money withdrawn in the same tax year can be paid back without using more of your annual allowance. Always check if your provider supports flexibility before assuming it applies.

Can You Transfer an ISA?

Yes. You can transfer Cash, Stocks & Shares, or Lifetime ISAs between providers. Always use the provider’s official ISA transfer process. Moving money yourself by withdrawing and redepositing may lose tax-free status and might count toward this year’s allowance.

Simple Example: Using the Allowance

Amira has £10,000 to save now and plans to invest £300 per month. She could place £6,000 into a Cash ISA for short term goals, invest £4,000 into a Stocks & Shares ISA, then set a monthly direct debit of £300 to the Stocks & Shares ISA. She stays within the £20,000 limit and keeps cash separate from long term investing.

Common Mistakes to Avoid

• Withdrawing and redepositing without a flexible ISA, which can waste allowance
• Paying into two of the same ISA type in one tax year with different providers
• Forgetting LISA rules and triggering the 25% penalty
• Ignoring fees on investment platforms which can erode returns

Explore the ISA Types

• Cash ISAs Explained
• Stocks & Shares ISAs Explained
• Lifetime ISAs Explained
• Innovative Finance ISAs Explained
• Junior ISAs Explained

Frequently Asked Questions