📍 Quick Answer — TL;DR

The total ISA allowance for 2026/27 is £20,000 per person per tax year. You can split this across Cash, Stocks & Shares, Innovative Finance, and Lifetime ISAs (£4,000 Lifetime sub-limit). Junior ISAs have a separate £9,000 limit per child that does not eat into your adult allowance. Major 2026 reforms now let you pay into multiple ISAs of the same type and perform partial transfers of current-year money. The tax year deadline is 5 April 2027 — any unused allowance is permanently lost.

⚠️ 2027 Warning: From April 2027, savers under 65 will be capped at £12,000/year in Cash ISAs. This is the last tax year to deposit the full £20,000 into a cash wrapper.

📋 ISA ALLOWANCES & RULES — 2026/27

ISA Allowances & Rules: The Complete 2026/27 Investor's Manual

ISA rules are at their most flexible since the scheme launched. New multi-subscription freedoms, partial transfer rights and expanded eligibility have fundamentally changed how you can use your £20,000 annual allowance. But a historic policy shift is incoming — the 2027 Cash ISA cap will permanently reduce how much cash higher earners can shelter tax-free.

Below: every allowance confirmed by HMRC, every rule change in full, the exact transfer process you must follow to protect your tax-free status, and a clear strategy guide for the incoming 2027 reforms.

£20,000
Adult ISA Allowance
Per person, 2026/27
£9,000
Junior ISA Allowance
Per child — separate limit
£4,000
Lifetime ISA Sub-Limit
Counts toward £20k
5 Apr
Annual Deadline
Unused allowance expires
£12,000
Cash Cap from 2027
Under-65s only

🚨 FOUR ISA FACTS EVERY SAVER MUST KNOW BEFORE 5 APRIL 2027

⏰ The 5 April deadline is absolute

Your £20,000 ISA allowance expires at midnight on 5 April every year. You cannot carry it forward, roll it over, or reclaim it. Miss the deadline and that allowance is gone permanently.

💸 Withdrawing manually destroys tax-free status

Never withdraw ISA funds to a current account to move them elsewhere. That money permanently loses its tax-free wrapper. Always use an official ISA Transfer — your new provider handles it.

📊 Dividend tax has risen sharply in 2026

Dividend tax rates are now 10.75% (basic rate) and 35.75% (higher rate) outside an ISA. Sheltering investments in a Stocks & Shares ISA is more valuable than at any point in the last decade.

⚠️ 2026/27 is the last year for a full £20k cash ISA

From April 2027, savers under 65 are capped at £12,000/year in Cash ISAs. If cash savings are your priority, maximising this year's allowance now is the single most impactful financial move you can make.

01 — 2026/27 ALLOWANCES

The 2026/27 ISA Allowance Table — Every Limit Confirmed

All ISA limits for 2026/27 have been frozen by the Chancellor. However, with dividend and capital gains taxes both rising sharply outside of an ISA, your allowance is more valuable in real terms than at any point in the scheme's history.

📊 Complete ISA Allowance Table — 2026/27 Tax Year

ISA Type2026/27 Limit
Adult ISA (overall)
Cash + S&S + IF + LISA combined		£20,000
Cash ISA
Instant access, notice, or fixed		£20,000
Stocks & Shares ISA
Funds, ETFs, shares — age 18+		£20,000
Lifetime ISA (LISA)
Sub-limit — part of £20k total		£4,000
Innovative Finance ISA
Peer-to-peer & crowdfunding		£20,000
Junior ISA (JISA)
Separate — does not affect adult limit		£9,000

📅 How the table changes from April 2027

Cash ISA (under 65)

£12,000 cap

S&S ISA (unchanged)

£20,000

Savers 65+ are exempt from the Cash ISA cap and retain the full £20,000 cash allowance.

Why the frozen allowance is more powerful than it looks

Tax Outside an ISA — 2026 Rates

Dividend Tax (Higher Rate)

On dividends above personal allowance

35.75%

Dividend Tax (Basic Rate)

On dividends above personal allowance

10.75%

Capital Gains Tax (Higher Rate)

On gains above annual exempt amount

24%

Inside a Stocks & Shares ISA

Dividends, gains & interest — all

0%

💡 Couples: Double Your Tax-Free Shelter

Each adult has their own independent £20,000 allowance. A couple investing together can shelter a combined £40,000 per year completely tax-free — rising to £58,000 per year if both have a Lifetime ISA and a child with a Junior ISA.

2 Adults

£40,000/yr

+ 1 Child JISA

£49,000/yr

02 — MAJOR RULE CHANGES

Three Rule Changes That Transform Your ISA Strategy in 2026

The ISA Reform package that began in 2024 reached full maturity in 2026. These three changes fundamentally alter how you can use your annual allowance — if you haven't reviewed your ISA approach in the last two years, your strategy may be out of date.

1
GAME CHANGER

Multi-Account Subscriptions Now Allowed

You can now open and pay into multiple ISAs of the same type within the same tax year.

Previously, you were limited to one Cash ISA and one Stocks & Shares ISA per tax year. Open a second and you'd violate HMRC rules. That restriction is now abolished entirely.

✅ Real-world example:

Put £5,000 into a fixed-rate Cash ISA with NatWest for the higher guaranteed rate, and another £5,000 into an easy-access Cash ISA with Moneybox for liquidity — both in the same 2026/27 tax year, without breaking any rules.

The limit still applies: Your combined deposits across all accounts of all types must not exceed £20,000. The rule changed — the allowance didn't.

2
TRANSFER FREEDOM

Partial Transfers of Current-Year Funds

You no longer need to move all your current-year deposits in one go.

Previously, if you wanted to transfer money you'd deposited this year to a better-rate provider, you had to move the entire balance. You couldn't split it. That all-or-nothing rule has now gone.

✅ Real-world example:

You deposited £15,000 into a Cash ISA in April 2026. In October, a better rate appears. You can now transfer exactly £8,000 of that current-year money to the new provider — keeping £7,000 where it is. No penalties, no allowance impact.

Rate hunters rejoice: This change effectively lets you optimise your interest rates dynamically throughout the year without being locked in to your opening provider.

3
NEW ELIGIBILITY

Fractional Shares Now ISA-Eligible

HMRC has officially confirmed fractional share ownership qualifies inside a Stocks & Shares ISA.

This is a significant win for smaller investors. Previously, buying into high-priced US stocks like Nvidia or Berkshire Hathaway required thousands of pounds for a single share. Fractional ownership — buying a slice of one share — was in a grey area. HMRC has now formally confirmed it's permitted inside an ISA.

✅ Real-world example:

Invest £50 into 0.025 of a Berkshire Hathaway Class A share inside your Stocks & Shares ISA. All dividends and capital gains on that fraction are fully tax-free.

Platform support varies: Not every provider currently offers fractional shares within an ISA wrapper. Check your platform's T&Cs before relying on this feature.

03 — THE ISA TYPES

The Four ISA Types: Which Is Right for Your Goals?

Every ISA type uses the same £20,000 annual allowance but serves a different financial purpose. Choosing the right type — or the right combination — is the most impactful ISA decision you will make.

🏧

Cash ISA

Safe capital Guaranteed rate FSCS £120k

A tax-free savings account that pays a guaranteed interest rate. Critical in 2026 because the Personal Savings Allowance (PSA) is being eroded by high interest rates — many savers are paying income tax on savings interest for the first time. A Cash ISA eliminates this entirely.

Best for: Emergency funds, short-term savings goals (1–3 years), money you cannot afford to lose.

Best Cash ISAs 2026 →
📈

Stocks & Shares ISA

0% CGT 0% Dividend Tax Capital at risk

Invest in funds, ETFs, bonds or individual company shares — all inside a tax-free wrapper. All capital gains and dividends are permanently exempt from HMRC. Must be 18+. With dividend tax now at 35.75% for higher-rate payers outside an ISA, the value of this shelter has never been higher.

Best for: Long-term wealth building (5+ years), retirement saving alongside a pension, sheltering dividend income.

Best S&S ISAs 2026 →
🏡

Lifetime ISA (LISA)

25% bonus £4,000 sub-limit 25% penalty if misused

Designed exclusively for two purposes: buying a first home (property up to £450k) or saving for retirement (accessible tax-free at 60). The government adds £1 for every £4 you save — up to £1,000 free money per year. Ages 18–39 to open, up to age 50 to contribute.

⚠️ The catch: Withdraw for any other reason and HMRC levies a 25% penalty on the full pot — meaning you lose a portion of your own money, not just the bonus.

Lifetime ISA Full Guide →
👶

Junior ISA (JISA)

£9,000 separate limit Locked until 18 Tax-free growth

A tax-free savings or investment account for children under 18. The £9,000 annual allowance is completely separate from your own £20,000 — saving into a JISA does not reduce your personal ISA allowance. Money is locked until the child's 18th birthday, at which point it legally becomes theirs.

💡 Key advantage: A JISA eliminates the £100 parent-gift interest rule, making it essential for higher-rate taxpayers gifting large sums to their children.

Junior ISA Full Guide →
04 — TRANSFER RULES

ISA Transfer Rules: The One Mistake That Destroys Tax-Free Status Forever

Transferring an ISA to a better rate or platform is perfectly straightforward — if you do it correctly. Done wrong, you permanently lose the tax-free status on the money you move. Here is the exact process you must follow.

🚫 The Golden Rule — Never Break This

Never withdraw ISA money to your current account to move it to another ISA. The moment it touches your current account, it permanently loses its tax-free ISA status. When you re-deposit it, it counts against this year's £20,000 allowance — and if your allowance is already used, you simply cannot reinvest it in an ISA at all.

✅ Electronic ISA Transfer — Do This

1

Apply to your NEW provider

Open the new ISA account and request an ISA Transfer-In form. They initiate the process — you do not contact your old provider directly.

2

New provider contacts old provider

The transfer is handled electronically via Bacs or Faster Payments between institutions. You never touch the money.

3

Money arrives, ISA status preserved

Typically 7–15 working days for Cash ISAs. The full tax-free status transfers intact. Does not use your £20,000 allowance.

❌ Manual Withdrawal — Never Do This

1

You withdraw to current account

The money leaves the ISA wrapper. From this moment, it is ordinary taxable money.

2

ISA status is permanently destroyed

There is no mechanism to restore it. The money can never be returned to an ISA as a transfer — it must be counted as a fresh subscription.

3

Re-deposit eats your annual allowance

If you re-invest £20,000 in a new ISA, that uses your entire year's allowance. If your allowance is already used, you cannot re-shelter the money in an ISA at all.

📊 ISA Transfer Comparison: Electronic vs Manual

Factor✅ Electronic Transfer❌ Manual Withdrawal
Tax-free status✅ Fully maintained❌ Permanently lost
Uses annual allowance✅ No — transfers are free❌ Yes — re-deposit counted
Timeframe7–15 working days (Cash)Instant — but status lost immediately
Interest during transferMay pause during transit periodEarns current-account rate (taxable)
Who initiatesNew provider (you apply to them)You — via bank/app
Historical records preserved✅ Full audit trail maintained❌ ISA history broken

⚠️ 2026 Legacy Provider Warning: Some older ISA providers still use paper-based manual transfer processes rather than the digital Cash ISA Transfer Service. These can take up to 30 days. Always check your new provider's "ISA Transfer-In" policy and confirm they support digital transfers before initiating. If they do not, factor the timeline into your decision.

05 — 2027 CASH CAP

The 2027 Cash ISA Cap: What Changes, Who Is Affected, and What To Do Now

The 2025 Autumn Budget introduced the most significant change to ISA rules in over a decade. From April 2027, the government will cap how much cash most savers can shelter from tax. Here is everything you need to know — and the exact steps to take in the 2026/27 tax year before it arrives.

📅 Cash ISA Cap — Timeline & Impact

Now → 5 April 2027: Current rules

Full £20,000 can be deposited in a Cash ISA. Any under-65 adult can maximise their cash allowance. This window closes permanently in April 2027.

6 April 2027: Cash ISA cap begins

Savers under 65 are capped at £12,000/year in Cash ISAs. Unused Cash ISA allowance cannot be redirected to other ISA types — it is simply lost.

From April 2027: S&S ISA unchanged

The Stocks & Shares ISA limit remains at £20,000. The government is deliberately incentivising UK savers to move from cash deposits into stock market investment.

65+ savers: Exempt from the cap

Savers aged 65 and over retain the full £20,000 Cash ISA allowance regardless of the new rules. The cap applies to under-65s only.

Before vs After: Under-65 Cash ISA Allowance

Now (2026/27)

£20,000

Full cash allowance
Last chance

From April 2027

£12,000

Capped for under-65s
Permanent change

Annual loss of tax-free cash shelter: £8,000 per person

The government's rationale — and what to do about it

🏛️ Why is the government doing this?

The government is deliberately redirecting UK household savings from low-risk cash deposits into the stock market. The policy goal is to increase UK equity ownership, boost investment in British businesses, and reduce the national over-reliance on cash as a savings vehicle. The Stocks & Shares ISA limit is deliberately left unchanged at £20,000 to signal where the government wants savers to redirect their money.

📋 Your 2026 Action Plan — Before the Cap Arrives

✅ If you are primarily a cash saver

Maximise your full £20,000 Cash ISA allowance before 5 April 2027. Once the cap is in place, your annual cash shelter permanently drops to £12,000. Large deposits made under current rules are protected inside the wrapper indefinitely — the cap only restricts new annual contributions.

📈 If you have long-term savings goals

Consider a Stocks & Shares ISA for any portion you won't need for 5+ years. The S&S ISA cap is NOT changing — and the 35.75% dividend tax outside makes it increasingly valuable to shelter equities.

💡 If you are 62–64 now

You'll turn 65 within a few years of the cap arriving. Plan to maximise your cash allowance under the current £20,000 limit before your birthday — and know that the cap will lift when you reach 65, giving you access to the full amount again.

06 — FREQUENTLY ASKED QUESTIONS

ISA Rules FAQs

Straight answers to the most-searched questions about ISA allowances, rules, and deadlines for 2026/27 — written for AI Overviews, featured snippets and real investors.

💷

What is the ISA allowance for 2026/27?

The total adult ISA allowance for the 2026/27 tax year (6 April 2026 to 5 April 2027) is £20,000 per person. You can distribute this across any combination of Cash, Stocks & Shares, Innovative Finance, and Lifetime ISAs — subject to the Lifetime ISA's £4,000 sub-limit.

📌 Key sub-limits for 2026/27:

Adult total: £20,000 · Lifetime ISA (LISA) sub-limit: £4,000 (part of £20k) · Junior ISA: £9,000 (completely separate — does not affect your £20k) · All limits frozen by the Chancellor until at least 2030.

The allowance is personal — it cannot be shared between spouses or civil partners. However, couples each have their own independent £20,000 limit, giving them a combined annual shelter of £40,000.

🔢

Can I have more than one ISA of the same type in one tax year?

Yes — from the 2024/25 tax year onwards, the old rule restricting savers to one of each ISA type per year was completely abolished. You can now open and contribute to multiple Cash ISAs, multiple Stocks & Shares ISAs, and so on within the same tax year.

✅ Example split strategy:

Open a fixed-rate Cash ISA with Bank A for £8,000 (locking in a higher rate), plus an easy-access Cash ISA with Bank B for £5,000 (keeping liquidity), plus a Stocks & Shares ISA with an investment platform for £7,000. Total: £20,000 — legal and fully HMRC-compliant.

⚠️ The limit still applies: Combined contributions across all accounts and all ISA types must not exceed £20,000. Opening multiple ISAs does not multiply your allowance.

🔄

What is a Flexible ISA, and why does it matter?

A Flexible ISA allows you to withdraw money and re-deposit it in the same tax year without the re-deposit counting against your annual £20,000 allowance. It gives your ISA a revolving door — you can access money when you need it and rebuild the balance later without penalising yourself.

💡 Flexible ISA example:

You have £20,000 in a Flexible Cash ISA. You withdraw £6,000 in July for a home repair. In September, you can re-deposit that same £6,000 — and it does not count towards your £20,000 allowance, because it is being replaced, not newly deposited. With a standard (non-flexible) ISA, that £6,000 re-deposit would permanently consume £6,000 of your annual allowance.

⚠️ Not all providers offer it: Flexible status is a feature that providers opt into — it is not automatic. Always check your ISA's terms before withdrawing and expecting to replace funds. Fixed-rate and notice ISAs rarely offer flexible terms.

✈️

Can I pay into an ISA if I live abroad?

Generally, no. To make new contributions to an ISA, you must be a UK resident for tax purposes. HMRC defines this by the Statutory Residence Test — if you spend fewer than 183 days per year in the UK, or your primary home is overseas, you are typically considered non-UK resident and cannot contribute.

✅ What you CAN do if you move abroad:

Your existing ISA remains open and continues to grow tax-free. All existing balances retain their ISA status permanently. You simply cannot add new money. You can still hold the account, switch investments within it (for Stocks & Shares), and access the funds if allowed by the account terms.

💡 Returning to the UK: Once you re-establish UK tax residency, you can resume contributions in the tax year you return — up to the standard annual limit for that year.

🏛️

What happens to my ISA when I die?

Your spouse or civil partner can inherit your ISA tax-free via an Additional Permitted Subscription (APS). This gives them a one-off extra ISA allowance equal to the value of your ISA at the date of your death — in addition to their own annual £20,000 — allowing them to transfer your entire pot into their own ISA while preserving its tax-free status.

📋 APS rules and deadline:

The APS must be claimed within 3 years of the date of death, or within 180 days of the completion of the administration of the estate — whichever is later. The surviving spouse does not need to wait for probate to claim. They claim from the ISA provider directly.

⚠️ Other beneficiaries: Children, siblings, or other named beneficiaries do not receive an APS. The ISA forms part of your estate and may be subject to Inheritance Tax. The money passes through the estate as normal. ISA tax protection only extends to spouse and civil partner via APS.

👶

Can I open an ISA for my child? Does it affect my allowance?

Yes — a Junior ISA (JISA) is specifically designed for children under 18. Crucially, the Junior ISA has its own separate £9,000 annual allowance per child that does not affect your personal £20,000 adult ISA limit. Saving into a Junior ISA does not reduce what you can put into your own accounts.

✅ Family ISA power example:

Two adults can shelter £40,000/year in their own ISAs, plus an additional £9,000 per child in Junior ISAs. A family of two adults and two children can shelter up to £58,000 per year completely free from Income Tax, Capital Gains Tax and Dividend Tax.

📌 Key rules: Only a parent or legal guardian can open a Junior ISA. Once opened, anyone — grandparents, relatives, friends — can contribute. The money is locked until the child turns 18, when it legally becomes theirs to manage.

Read our full Junior ISA guide →

NOW YOU KNOW THE RULES — FIND THE BEST ACCOUNTS

Explore Every ISA Type

Now that you know the rules, allowances and transfer process — find the best accounts for your specific goals across the TaxYZ ISA hub.

📋 ACT BEFORE 5 APRIL 2027

Your £20,000 Cash ISA Allowance: This Is the Last Year to Use It in Full

From April 2027, under-65s will be permanently capped at £12,000/year in Cash ISAs — a £8,000 annual reduction in tax-free cash shelter. Maximising your allowance before 5 April 2027 is the single highest-impact ISA decision you can make this year.

£20,000
Adult Allowance
£9,000
Junior ISA
£4,000
LISA Sub-Limit
5 Apr
Deadline

📌 THE 2026/27 RULES IN 4 LINES

✅

You can now pay into multiple ISAs of the same type in one tax year — the old one-per-type rule is abolished.

✅

You can make partial transfers of current-year funds — move £5,000 to a better rate without moving everything.

⚠️

Never withdraw to a current account to move ISA money — tax-free status is permanently destroyed the moment it leaves the wrapper.

🚨

From April 2027, under-65s are capped at £12,000/year in Cash ISAs. This is the final year for the full £20,000 cash allowance.

TaxYZ provides educational information only and is not regulated by the FCA. All allowances, rates and tax rules are based on information current as of February 2026 and are subject to change by HMRC. The 2027 Cash ISA cap details reflect the policy announced in the 2025 Autumn Budget. Always verify the latest HMRC guidance before making financial decisions. TaxYZ does not provide regulated financial advice.