What Is an ISA? Types, Limits and Rules
An ISA lets you save or invest up to £20,000 a year without paying tax on the interest, income or gains.
What it is
An Individual Savings Account is a tax-free wrapper. Whatever you earn inside it, interest, dividends or growth, is free of tax and does not need to be reported on a tax return.
The yearly limit
In 2026/27 you can put up to £20,000 into your ISAs, split between types as you wish. Unused allowance does not carry over to the next tax year.
The main types
- Cash ISA: works like a savings account.
- Stocks and shares ISA: invest in funds, shares and bonds. Values can fall as well as rise.
- Lifetime ISA: for people aged 18 to 39 saving for a first home or retirement. You can pay in up to £4,000 a year and get a 25% government bonus, but there is a charge for withdrawing early for other reasons. It counts towards the £20,000 limit.
- Junior ISA: for children under 18, with its own yearly limit of £9,000.
Why use one?
Outside an ISA, savings interest above your Personal Savings Allowance is taxed (£1,000 for basic rate taxpayers, £500 for higher rate). Check with the savings interest tax calculator. See how savings grow with the compound interest calculator. ISA rules can change, so check GOV.UK.
This guide is general information, not financial or legal advice. Rates checked 8 October 2026 against GOV.UK.
Frequently asked questions
How much can I put in an ISA?
£20,000 a year across all your ISAs in 2026/27.
Is ISA interest taxed?
No. Interest, dividends and gains in an ISA are free of UK tax.
Can I have more than one ISA?
Yes, you can pay into several types in the same year, as long as the total stays within the yearly limit.
Related
Figures are for the 2026/27 tax year from official sources and are estimates for guidance only, not financial or legal advice. Printed from ukanswers.co.uk.