Every UK adult can shelter up to £20,000 a year from tax inside an ISA. Here is how the 2025/26 allowance works, who it suits, and how it interacts with your other savings allowances.
The Individual Savings Account is the most widely used tax shelter in the UK, and for the 2025/26 tax year the headline number every saver needs to know is £20,000. That is the maximum you can pay into ISAs between 6 April 2025 and 5 April 2026 while keeping every penny of interest, dividend and capital growth entirely free of income tax and capital gains tax, for life.
Unlike most tax allowances, the ISA allowance is not about reducing your tax bill this year. It is about permanently removing future returns from the tax net. Money inside an ISA never has to be declared on a Self Assessment return, never counts towards your Personal Savings Allowance, and never triggers capital gains tax no matter how much it grows. That makes the annual £20,000 limit one of the most valuable pieces of tax planning available to ordinary savers and investors.
The £20,000 allowance has been frozen at this level since April 2017, and the government has confirmed it remains £20,000 for 2025/26. The crucial point is that this is a single pooled limit across every ISA type you hold, not £20,000 per account.
There are four main ISA types open to adults, and your contributions to all of them count towards the same £20,000:
| ISA type | What it holds | Notable limit |
|---|---|---|
| Cash ISA | Savings deposits earning interest | None beyond the £20,000 overall |
| Stocks and Shares ISA | Shares, funds, bonds | None beyond the £20,000 overall |
| Innovative Finance ISA | Peer-to-peer loans | None beyond the £20,000 overall |
| Lifetime ISA | Cash or investments for a first home or retirement | £4,000 per year, within the £20,000 |
So you could split your £20,000 as £10,000 into a cash ISA, £6,000 into a stocks and shares ISA and £4,000 into a Lifetime ISA. What you cannot do is put £20,000 into each.
From 6 April 2024, the rules were relaxed so you can now open and pay into more than one ISA of the same type in a single tax year. Previously you could only subscribe to one cash ISA and one stocks and shares ISA per year. Now you might run two cash ISAs with two different banks to chase the best rates, as long as the combined total stays inside £20,000. The Lifetime ISA is the main exception: you can still only contribute to one LISA per tax year.
The adult ISA is available to any UK resident aged 18 or over (16 and 17-year-olds can still open a cash ISA under transitional rules in some cases, though the standard age is now 18 for new cash ISAs). You must have a National Insurance number and be resident in the UK for tax purposes. Crown servants posted overseas and their spouses also qualify.
For children under 18, the Junior ISA has its own separate allowance of £9,000 for 2025/26. This does not come out of a parent's £20,000 adult allowance, so a family can shelter £20,000 per adult plus £9,000 per child each year. Junior ISA money is locked until the child turns 18, at which point it converts to an adult ISA.
There is nothing to claim from HMRC. The tax relief is built into the account itself. To use the allowance you simply:
Providers report your subscriptions to HMRC automatically, so the system polices the limit behind the scenes. If you accidentally over-subscribe, HMRC will usually contact your provider to unwind the excess, and you should not try to fix it yourself by withdrawing without instruction.
If you want to move an existing ISA to a better provider, always use the formal ISA transfer process rather than withdrawing and re-depositing. A transfer preserves the tax-free status of money from previous years and does not use up any of this year's allowance. Withdrawing the money and paying it back in would consume fresh allowance and could lose years of accumulated tax shelter.
Priya, a graphic designer, wants to make full use of her 2025/26 allowance. She does the following:
Her total subscriptions are £9,996 + £4,000 + £6,000 = £19,996, comfortably inside the £20,000 limit. The £1,000 LISA bonus does not count towards her allowance because it is government money, not her own subscription. Every penny of interest on the cash ISA, growth on the investments, and the LISA bonus is tax-free.
If Priya had tried to add £20,000 to each account she would have breached the limit by £39,996, and HMRC would have required the excess to be removed.
The ISA allowance does not taper with income the way the personal allowance taper over £100k does, and it is not reduced for high earners. A millionaire and a minimum-wage worker both get exactly £20,000. But it interacts with several other allowances in ways worth understanding.
The most important interaction is with your Personal Savings Allowance. Interest earned inside an ISA is invisible to the tax system, so it never eats into your PSA. This is why the conventional wisdom is to shelter your highest-yielding cash inside an ISA first, leaving your PSA free to cover interest on ordinary accounts. If you want to see how much ordinary interest you can earn before tax bites, the savings tax calculator and the guide to the Personal Savings Allowance walk through the £1,000, £500 and £0 bands.
For investors, the dividend allowance (£500 in 2025/26) and the capital gains tax annual exempt amount (£3,000 in 2025/26) only matter outside an ISA. Dividends received inside a stocks and shares ISA do not use your dividend allowance, and gains realised inside an ISA never count towards the CGT exempt amount. This makes the ISA especially powerful for investors who have already used their small annual CGT and dividend allowances elsewhere.
Because the allowance resets every 6 April with no carry-over, the weeks before 5 April see a rush of last-minute ISA contributions. If you have spare cash and have not used your full £20,000, topping up before the deadline locks in another year's worth of tax-free shelter that you can never get back once the tax year closes.
A common strategy for couples is to make sure both partners fill their allowances, giving the household £40,000 of tax-free subscriptions a year, plus £9,000 per child via Junior ISAs. Over a decade of frozen allowances, a couple maximising every year could shelter well over £400,000 from tax, before any growth.
The ISA allowance is one of the rare tax breaks that rewards you for life. Money you shelter today stays tax-free for as long as it stays inside the wrapper.
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