ISA Allowance 2026/27: £20,000 and the £12,000 Cash ISA Cap

An Individual Savings Account (ISA) lets you save or invest without paying tax on the interest, dividends or gains. For the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027, the ISA allowance is £20,000, unchanged since 2017/18. But a big change is coming for cash ISAs from April 2027. This guide explains the types of ISA, how the £20,000 allowance works, what the new cash ISA cap means, and why ISAs matter more than ever.

The types of ISA

A cash ISA works like a savings account, but the interest is tax-free. It suits short-term savings and emergency funds. A stocks and shares ISA holds investments such as funds, shares and bonds, with tax-free dividends and gains, though values can fall as well as rise. An innovative finance ISA holds peer-to-peer loans, with your capital at risk.

A Lifetime ISA is for people aged 18 to 39. You can pay in up to £4,000 a year, and the government adds a 25% bonus of up to £1,000 a year. It counts towards your £20,000 allowance and is meant for a first home or retirement; other withdrawals usually cost a 25% charge, which means you can get back less than you paid in.

You can split the £20,000 across these types however you like, and you can now pay into more than one ISA of the same type in a single tax year.

How the £20,000 ISA allowance works

The allowance is "use it or lose it": any unused part cannot be carried into the next tax year. Money you move from one ISA to another through a formal transfer does not count against the allowance, so you can switch to a better rate without losing your tax-free status. If you withdraw from a standard ISA, the money usually cannot be replaced without using new allowance, unless your ISA is a "flexible" ISA that allows you to put money back within the same tax year. Children can have a Junior ISA with its own separate allowance.

What changes for cash ISAs in April 2027

From 6 April 2027, savers under 65 will be able to put no more than £12,000 a year into cash ISAs. The other £8,000 of the allowance can still go into stocks and shares or other non-cash ISAs. Over-65s keep the full £20,000 for cash, and existing cash ISA balances are not affected, so money already saved stays tax-free.

That makes 2026/27 the last tax year in which under-65s can put the whole £20,000 into cash. If you have spare savings and want them in cash, it may be worth using the full allowance before 5 April 2027.

Why ISAs matter more now

Outside an ISA, savings interest above your personal savings allowance is taxed, and the tax rates on savings income rise by two percentage points from April 2027. With interest rates higher than a few years ago, more savers are exceeding their allowance. Keeping savings in an ISA removes the need to track interest for tax and protects you from future rate rises. See our guide to tax on savings interest for examples.

Cash ISA or stocks and shares ISA?

Cash suits money you may need within a few years, such as an emergency fund or a house deposit. A stocks and shares ISA suits long-term goals, because investments have historically grown faster than cash over periods of five years or more, despite short-term falls. Many people use both. Premium Bonds are another tax-free option for cash, though prizes are not guaranteed; see Premium Bonds explained. For retirement saving, compare ISAs with pensions, which get tax relief on contributions; see our guide to the SIPP.

Frequently asked questions

What is the ISA allowance for 2026/27?

£20,000, which you can split across cash, stocks and shares, innovative finance and Lifetime ISAs.

What is the new cash ISA limit?

From 6 April 2027, under-65s can put a maximum of £12,000 a year into cash ISAs.

Can I carry over unused ISA allowance?

No. Unused allowance is lost at the end of the tax year on 5 April.

ISA allowance 2026/27: £20,000 now, and the cash ISA cap from 2027