UK ISA Types Guide (2026/27)

An Individual Savings Account shelters interest, income and capital gains from Income Tax and Capital Gains Tax, and you do not need to declare any of it on a tax return. This guide covers the four adult ISA types (Cash, Stocks and Shares, Innovative Finance and Lifetime) and the Junior ISA, plus flexible ISAs, paying into several ISAs of the same type, transfers, and what happens on death. The rules come from GOV.UK and the ISA Regulations. Interest rates and investment returns in the examples are stated assumptions, not market rates.

1. Overview

In 2026/27 you can save up to £20,000 in ISAs, in one account or split across several. That allowance is shared by the four adult types: cash, stocks and shares, innovative finance and Lifetime ISAs. Up to £4,000 of it can go into a Lifetime ISA. You must be 18 or over and UK resident (or a Crown servant or armed forces member, or their spouse or civil partner) to open an adult ISA. Children under 18 can have a Junior ISA with its own £9,000 limit.

ISAs matter most for higher and additional-rate taxpayers, whose Personal Savings Allowance is £500 or £0, and for anyone with dividends above the £500 Dividend Allowance. They matter at any tax rate for capital gains: the CGT annual exempt amount fell from £12,300 in 2022/23 to £3,000 from 2024/25, so gains on a sizeable investment portfolio held outside an ISA are far more likely to be taxed.

2. Cash ISA

A Cash ISA holds savings in bank and building society accounts (and some National Savings and Investments products). Interest is tax-free and does not count towards your Personal Savings Allowance.

Account types. Providers offer easy-access (variable rate, withdraw any time), fixed-rate (locked in for a set term, often with a penalty for early withdrawal) and notice accounts (you give notice before withdrawing). The terms are set by each provider.

Higher-rate worked example. A higher-rate taxpayer with £20,000 in cash at an assumed 4.5% earns £900 of interest a year. Outside an ISA, with no other savings income, the £500 Personal Savings Allowance covers part of it and the remaining £400 is taxed at 40%: £160 a year that the ISA saves.

Basic-rate caveat. A basic-rate taxpayer's £1,000 Personal Savings Allowance covers the interest on about £22,222 of savings at an assumed 4.5%. Below that, the ISA wrapper saves no tax and the interest rate on offer matters more.

FSCS protection. Since 1 December 2025 the Financial Services Compensation Scheme protects deposits up to £120,000 per eligible person with each UK-authorised bank, building society or credit union. Banks in the same group that share a banking licence count as one bank, so check with the FSCS's online checker.

Change from April 2027. From 6 April 2027, people under 65 can pay at most £12,000 a year into cash ISAs within the £20,000 overall limit; people aged 65 and over keep a £20,000 cash limit.

3. Stocks and Shares ISA

A Stocks and Shares ISA holds investments. Dividends, interest and capital gains inside it are tax-free, and you can withdraw at any time (subject to your provider's terms).

What you can hold. GOV.UK lists:

• shares in companies
• unit trusts and investment funds
• corporate bonds
• government bonds
• long-term asset funds

Cryptoasset exchange traded notes cannot be held in a stocks and shares ISA unless they were held there before 6 April 2026; they now go in an innovative finance ISA. You cannot move shares you already own outside an ISA into one, unless they come from an employee share scheme.

Tax treatment. Outside an ISA, a £100,000 portfolio with an assumed 3% dividend yield pays £3,000 of dividends. The first £500 is covered by the Dividend Allowance and the other £2,500 is taxed at 10.75%, 35.75% or 39.35% depending on your band. Inside an ISA, none of it is taxed, and nor are gains when you sell.

Costs. Platform fees, fund charges and dealing charges vary widely between providers and are paid from inside the account, so they do not use any of your allowance. Compare the total cost before choosing.

4. Innovative Finance ISA

An Innovative Finance ISA (IFISA) holds:

• peer-to-peer loans - loans to people or businesses made without using a bank
• crowdfunding debentures - investing in a business by buying its debt
• funds whose notice or redemption period means they cannot be held in a stocks and shares ISA
• cryptoasset exchange traded notes, from 6 April 2026 (unless already held in a stocks and shares ISA before then)

Risk. These are not bank deposits, so FSCS deposit protection does not apply to them, and you can lose money if borrowers default. You may be able to transfer only cash, not other investments, out of an IFISA to another provider; ask how long a transfer would take.

Allowance. IFISA subscriptions share the £20,000 limit with your other adult ISAs.

5. Lifetime ISA (LISA)

A Lifetime ISA is for buying your first home or saving for later life. You can pay in up to £4,000 a year, which counts towards the £20,000 overall allowance, and the government adds a 25% bonus, up to £1,000 a year. It can hold cash, stocks and shares, or both.

Eligibility. You must be 18 or over but under 40 to open one, and make your first payment before you turn 40. You can keep paying in until 50. From 50 you cannot pay in or earn the bonus, but the account stays open and keeps earning interest or returns. You can pay into only one Lifetime ISA in a tax year.

First-home withdrawal rules. You can use the money towards your first home without a charge if all of these apply:

• the property costs £450,000 or less
• you buy at least 12 months after your first payment into the Lifetime ISA
• a conveyancer or solicitor acts for you, and the provider pays the money to them
• you buy with a mortgage (not a private mortgage from a relative or your spouse or civil partner)

If you buy with someone who also has a Lifetime ISA, you can both use your savings and bonus if you are both first-time buyers and meet the conditions.

The 25% withdrawal charge. Withdrawing for any reason other than a first home, being 60 or over, or terminal illness (less than 12 months to live) incurs a 25% charge on the amount withdrawn, bonus included. £4,000 paid in becomes £5,000 with the bonus; withdrawing it all costs £1,250, leaving £3,750, which is £250 (6.25%) less than you paid in. Transferring a Lifetime ISA to another type of ISA before 60 also incurs the charge.

Long-horizon example. Someone paying £4,000 a year from 25 to 49 (25 payments) gets £5,000 a year into the account with the bonus. At an assumed 5% a year real return, with each year's payment added at the year end, the pot is about £238,635 at 50 and about £388,712 at 60, in today's money. About £77,742 of that comes from the bonuses and their growth. Withdrawals from 60 are tax-free.

Best fit. First-time buyers under 40 aiming for a home within the £450,000 limit, and savers without employer pension contributions. For employees, employer pension contributions and higher-rate relief usually make the workplace pension the better first choice for retirement saving.

6. Junior ISA (JISA)

A Junior ISA is a tax-free savings account for a child under 18 living in the UK. In 2026/27 up to £9,000 can be paid in for each child, separately from any adult's £20,000 allowance. Anyone can pay in, but the total cannot go over £9,000 in the tax year.

Who can open. A parent or guardian with parental responsibility opens and manages it, but the money belongs to the child.

Cash and stocks and shares. A child can have one or both types of Junior ISA. Money can be moved between Junior ISAs, but not between a Junior ISA and an adult ISA.

16 to 18. The child can take control of the account at 16 but cannot withdraw until 18 (there is an exception for terminal illness).

At 18. A Junior ISA automatically becomes an adult ISA in the child's name, and they can take the money out.

Child Trust Funds. Children born between 1 September 2002 and 2 January 2011 may have a Child Trust Fund instead. A child cannot have both; to switch, ask the Junior ISA provider to transfer the CTF in. Up to £9,000 a year can still be paid into a CTF, with the year running from the child's birthday. At 18 a CTF matures and the money can be withdrawn or transferred to an adult ISA. If the account has already matured and nobody claimed it, see our guide to unclaimed Child Trust Funds.

7. Flexible ISAs

If your ISA is flexible, you can take cash out and put it back in during the same tax year without reducing that year's allowance. Your provider can tell you whether your ISA is flexible.

Worked example. Sara pays the full £20,000 into a flexible cash ISA in April, withdraws £5,000 in November and puts £5,000 back in February. Because the account is flexible, the repayment does not count as a new subscription and she stays within her £20,000.

With a non-flexible ISA, Sara's £20,000 subscription stands after the withdrawal, so she cannot pay the £5,000 back in that tax year. She gets a new allowance on 6 April.

Lifetime ISAs. Withdrawals before 60 other than for a first home or terminal illness carry the 25% charge, so a Lifetime ISA is an expensive place to keep money you may need.

8. Multiple ISAs of the same type from April 2024

The Individual Savings Account (Amendment) Regulations 2024, in force from 6 April 2024, removed the rule that you could pay into only one ISA of each type in a tax year. You can now split your £20,000 across, for example, two cash ISAs and a stocks and shares ISA. You can still pay into only one Lifetime ISA in a tax year.

The £20,000 overall limit and the £4,000 Lifetime ISA limit still apply. Under the same Regulations, HMRC can repair an account that is invalid only because the overall subscription limit was exceeded.

Rate-chasing use case. A saver who opened a fixed-rate cash ISA in May can now open a second cash ISA later in the same tax year if a better rate appears, splitting the allowance between them.

9. Transfers between providers and types

You can transfer all or part of your ISA savings to another provider at any time, to the same or a different type of ISA, and that includes money paid in during the current tax year (a change made by the 2024 Regulations). Transfers do not use any of your allowance. Ask the provider you want to move to for its ISA transfer form. If you withdraw the money yourself instead, you cannot pay that part of your allowance back in.

Timescales. Transfers should take no longer than 15 working days between cash ISAs and 30 calendar days for other types of transfer. For investments in an innovative finance ISA, ask the provider how long it will take. If a transfer is late, complain to the provider and then to the Financial Ombudsman Service.

Lifetime ISA transfers. Transferring a Lifetime ISA to another type of ISA before 60 incurs the 25% charge. Check the restrictions with your provider before moving one.

Junior ISA transfers. Money can move between Junior ISAs, and a Child Trust Fund can be transferred into a Junior ISA, but not between a Junior ISA and an adult ISA. At 18 a Junior ISA becomes an adult ISA automatically.

10. ISA vs other tax allowances

Personal Savings Allowance. Interest outside an ISA is tax-free up to £1,000 for basic-rate, £500 for higher-rate and £0 for additional-rate taxpayers. ISA interest does not use this allowance. See the personal savings allowance guide.

Dividend Allowance. Dividends outside an ISA are tax-free up to £500 and then taxed at 10.75%, 35.75% or 39.35% by band. Dividends in an ISA are not taxed. See the dividend allowance guide.

Capital Gains Tax annual exempt amount. £12,300 in 2022/23, £6,000 in 2023/24 and £3,000 from 2024/25 (Finance Act 2023 s.8). Gains inside an ISA are not taxed, so you can sell and rebalance without using it. Model gains outside the wrapper with the capital gains tax calculator.

ISA vs pension.

• Pension contributions get tax relief at your marginal rate (20% to 45% in England, Wales and Northern Ireland; 19% to 48% in Scotland). ISA contributions get none.
• You can usually take up to 25% of a pension tax-free (capped at £268,275); the rest is taxed as income. ISA withdrawals are tax-free.
• Most pensions cannot be accessed before 55, rising to 57 from 6 April 2028. ISAs can be accessed at any time (Lifetime ISAs carry the charge before 60).
• Most unused pension funds come into the estate for Inheritance Tax for deaths on or after 6 April 2027. ISAs are already part of the estate.

11. Inheritance and the Additional Permitted Subscription

ISA investments form part of your estate for Inheritance Tax, which is charged above the £325,000 nil-rate band and any residence nil-rate band (up to £175,000) and other reliefs available.

Continuing account. For deaths on or after 6 April 2018 the ISA becomes a "continuing account of a deceased investor". It stays free of Income Tax and CGT until the earliest of: the executor closing it, the estate administration being completed, or 3 years after the death (the provider closes it 3 years and 1 day after). No new payments can be made into it.

Spousal allowance (APS). A surviving spouse or civil partner can add an extra tax-free amount on top of their normal allowance: up to the value the ISA held at death or its value when it closes. Stocks and shares can be transferred to the survivor's ISA directly only if they use the same provider.

Worked APS example. If the deceased held £150,000 in ISAs, the survivor can add up to £150,000 (or the account's value at closure) in addition to their own £20,000 a year. This keeps the savings tax-free but does not change the Inheritance Tax due on the estate.

Business Relief. From 6 April 2026, Business Relief on shares designated as "not listed" on the markets of a recognised stock exchange, such as AIM shares, is 50% rather than 100%; unquoted private-company shares keep 100% within the £2.5m allowance (announced at Autumn Budget 2024). See the inheritance tax calculator.

12. Practical scenarios

Growth figures use the stated assumed rates with payments added at the end of each year. They are illustrations, not forecasts.

Scenario A: First-time buyer under 40 saving for a deposit

Amara is 28 and plans to buy a first home for about £230,000 in 3 years, within the £450,000 limit. She can save £400 a month (£4,800 a year).

Strategy: £4,000 a year into a Lifetime ISA, earning a £1,000 bonus each year, and the other £800 a year into a cash ISA. Over 3 years, before interest, the Lifetime ISA holds £15,000 (including £3,000 of bonus) and the cash ISA £2,400: £17,400 in total. She must buy with a mortgage and at least 12 months after her first Lifetime ISA payment.

Scenario B: Higher-rate saver building an emergency fund

Ben is 35, a higher-rate taxpayer, and wants £18,000 of easy-access cash for emergencies.

Strategy: £18,000 into an easy-access cash ISA, ideally a flexible one, leaving £2,000 of this year's allowance, which he puts into a stocks and shares ISA. At an assumed 4%, the cash earns £720 a year. Outside an ISA, with no other savings income, £500 would be covered by his Personal Savings Allowance and £220 taxed at 40%, so the ISA saves £88 a year. From 6 April 2027, at his age, only £12,000 a year could go into cash ISAs.

Scenario C: Long-term investor building a 25-year portfolio

Catherine is 40, lives in Edinburgh and has a workplace pension with employer contributions. She wants tax-free money she can reach before pension age.

Strategy: contribute enough to the workplace pension to get the full employer contribution, then £20,000 a year into a stocks and shares ISA. At an assumed 5% a year real return after charges, 25 years of £20,000 grows to about £954,542 in today's money, with no Income Tax on dividends or CGT on gains along the way.

Scenario D: Couple with £40,000 of joint ISA capacity

Daniel (32) and Emily (34) are both higher-rate taxpayers with workplace pensions and a 2-year-old daughter, Sophie.

Strategy: each has their own £20,000 allowance, so £40,000 between them. Daniel puts £20,000 into a stocks and shares ISA. Emily, still under 40, puts £4,000 into a Lifetime ISA (£1,000 bonus a year) and £16,000 into a cash ISA. Sophie's Junior ISA takes £9,000 a year, separately. At an assumed 5% real return, 16 years of £9,000 grows to about £212,917 by her 18th birthday. In total the household shelters £49,000 a year, before pension contributions.

13. Related tools and guides

• UK ISA allowance summary - the headline allowance and limits page.
• Pension contribution calculator - model RAS, Net Pay or salary sacrifice for any salary.
• Pension tax relief guide - the full pension relief reference.
• UK Capital Gains Tax calculator - model CGT outside the ISA wrapper.
• Dividend Allowance guide - allowance and rate-by-rate maths.
• Personal Savings Allowance guide - the allowance by tax band.
• How UK tax works (primer) - the canonical UK tax overview.
• UK tax relief guide - the survey of all personal tax reliefs.
• Inheritance Tax calculator - model IHT on the estate.
• UK tax glossary A-Z - definitions and cross-references.