ISA Allowance
2025/26 Guide

Every UK resident aged 18 or over (16 for Cash ISAs) can save or invest up to £20,000 per tax year in ISAs. All returns — whether interest, dividends, or capital gains — are completely tax-free. You never need to declare ISA income on your tax return.

The £20,000 allowance is a total limit across all your ISA types. You could put the full £20,000 into a Stocks & Shares ISA, or split it — for example, £16,000 into a Stocks & Shares ISA and £4,000 into a Lifetime ISA. The only rule is your combined contributions cannot exceed £20,000 in a single tax year.

The ISA tax year runs from 6 April to 5 April. Any allowance you do not use by 5 April is gone permanently — it does not roll over. This is why financial planners talk about "use it or lose it" and why many people rush to fund their ISAs before the end of the tax year.

Yes. You can divide your £20,000 allowance across different ISA types in any proportion you choose. For example, you could put £10,000 into a Stocks & Shares ISA, £6,000 into a Cash ISA, and £4,000 into a Lifetime ISA. The only constraint is the total across all types cannot exceed £20,000.

Since April 2024, the rules were relaxed further. You can now open multiple ISAs of the same type with different providers in the same tax year. Previously, you could only pay into one Stocks & Shares ISA and one Cash ISA per year. This flexibility makes it easier to spread your investments or take advantage of different providers' strengths.

If you contribute more than £20,000 across your ISAs in a single tax year, HMRC will contact you (and/or your ISA provider). The excess amount will need to be removed from the ISA and will not benefit from the tax-free wrapper.

Any returns earned on the excess contributions may be subject to tax. In practice, HMRC usually instructs the ISA provider to void the excess subscription and move it into a taxable account. You will not face a specific penalty beyond losing the tax benefit on the excess.

It is your responsibility to keep track of contributions across all your ISA providers. HMRC does monitor ISA subscriptions — providers report all ISA activity to HMRC annually — but it is best to avoid breaching the limit in the first place.

The Lifetime ISA is available to anyone aged 18 to 39 (you cannot open a new one after your 40th birthday, but you can continue contributing until age 50). You can contribute up to £4,000 per tax year, and the government adds a 25% bonus — that is up to £1,000 of free money each year.

The LISA can only be used for two purposes without penalty: buying your first home (priced up to £450,000) or withdrawing after age 60. If you withdraw for any other reason, you face a 25% penalty on the amount withdrawn — which means you lose the bonus and some of your original contribution. This makes the LISA unsuitable as a general savings vehicle.

The £4,000 LISA contribution counts towards your overall £20,000 ISA allowance. So if you maximise your LISA, you have £16,000 left for other ISA types. Over the maximum contribution period (age 18 to 50), you could accumulate up to £128,000 in contributions plus £32,000 in bonuses — before any investment growth.

The Junior ISA (JISA) allowance for 2025/26 is £9,000. This is entirely separate from the adult ISA allowance — contributing to a JISA does not reduce the parent's £20,000 allowance.

A Junior ISA can be opened by a parent or legal guardian for any child under 18. Anyone can contribute — parents, grandparents, family friends — but the £9,000 annual limit applies in total. The money belongs to the child and cannot be withdrawn until they turn 18, at which point the JISA automatically converts into an adult ISA.

Junior ISAs come in two types: Cash and Stocks & Shares. Given the long time horizon (up to 18 years), many parents opt for a Stocks & Shares JISA to benefit from the higher expected returns of equity investments. At 7% average annual returns, £9,000/year from birth would grow to approximately £340,000 by age 18.

Some ISA providers offer "flexible" ISAs. With a flexible ISA, if you withdraw money during the tax year, you can replace it without it counting towards your annual allowance — as long as you replace it within the same tax year.

For example, if you have contributed £15,000 to a flexible ISA and withdraw £5,000, you can re-deposit that £5,000 without it counting as a new subscription. You would still have £5,000 of fresh allowance to use. Without the flexible feature, replacing the £5,000 would use up £5,000 of your remaining allowance.

Not all ISAs are flexible — it depends on the provider. If flexibility matters to you (for example, if you might need temporary access to your ISA funds), check whether your provider offers this feature before opening an account. Cash ISAs are more commonly flexible; not all Stocks & Shares ISA providers offer it.

You can transfer your ISA from one provider to another without losing the tax-free status and without it affecting your annual allowance. Transfers must be arranged through the official ISA transfer process — your new provider will handle the paperwork and move the funds.

Important: Never withdraw from one ISA and manually deposit into another. If you do this, the withdrawal is permanent (you lose that portion of your ISA wrapper unless the ISA is flexible), and the deposit counts as a new subscription against your current year's allowance.

You can transfer between different ISA types — for example, moving a Cash ISA into a Stocks & Shares ISA. Current-year contributions must be transferred in full if you transfer the current year's ISA. Previous years' ISA savings can be transferred in full or in part. Transfers typically take 2 to 8 weeks, depending on whether the transfer involves selling investments (stock transfer) or moving cash.