The 2025/26 tax year ends on 5 April 2026 — and with it, your annual ISA allowance disappears forever. Every year, millions of UK savers miss out on tax-free growth simply because they didn't act in time. This guide covers everything you need to know about your ISA allowance: what it is, how it works, which ISA is right for you, and how to use every penny before the deadline.

What is the ISA Allowance for 2025/26?

The ISA allowance for 2025/26 is £20,000 per person. This is the maximum amount you can pay into ISAs between 6 April 2025 and 5 April 2026. The allowance is set by the government each tax year — and crucially, it cannot be carried over. If you don't use it by 5 April, it is gone permanently.

You can split your £20,000 allowance across multiple ISA types in the same tax year, as long as you don't exceed the total limit. For example, you could put £10,000 into a Cash ISA and £10,000 into a Stocks and Shares ISA.

There is also a separate Junior ISA allowance of £9,000 for children under 18, which is in addition to the adult allowance.

Types of ISA in the UK

There are four main types of ISA available to UK adults in 2025/26:

Cash ISA

A Cash ISA works like a standard savings account, but all interest earned is completely tax-free. With the personal savings allowance having been reduced significantly in recent years, a Cash ISA is increasingly valuable for anyone who holds meaningful savings.

You need to be at least 18 to open a Cash ISA. Interest rates on Cash ISAs vary between providers, with some competitive fixed-rate deals available for savers who can lock their money away.

Stocks and Shares ISA

A Stocks and Shares ISA allows you to invest in shares, funds, bonds and other assets — all free from capital gains tax and income tax on dividends. Over the long term, stock market investments have historically delivered stronger returns than cash savings, though the value of investments can go down as well as up.

According to recent data, the average Stocks and Shares ISA fund delivered around 11% growth over the twelve months to February 2026. Past performance is not a guide to future returns, but the long-term case for investing through an ISA remains strong for those with a time horizon of five years or more.

Lifetime ISA (LISA)

The Lifetime ISA is one of the most powerful savings tools available to younger UK savers — yet it remains widely underused. Here is how it works:

• You must be aged 18 to 39 to open a Lifetime ISA
• You can save up to £4,000 per year (this counts towards your £20,000 overall ISA allowance)
• The government adds a 25% bonus on everything you save — up to £1,000 per year
• You can use it to buy your first home (on properties up to £450,000) or for retirement from age 60
• If you withdraw for any other reason, you pay a 25% withdrawal penalty — which effectively claws back the bonus and a small portion of your own savings

The LISA is particularly powerful for first-time buyers. If you save £4,000 per year for five years, the government adds £5,000 in bonuses on top — reducing the amount you need to save yourself.

Junior ISA (JISA)

Parents or guardians can open a Junior ISA for children under 18. The allowance is £9,000 per year, separate from the adult allowance. The child cannot access the money until they turn 18, at which point it automatically becomes an adult ISA.

How Does the ISA Allowance Work?

A few key rules to understand:

The allowance resets each tax year. The UK tax year runs from 6 April to 5 April the following year. Your £20,000 allowance starts fresh on 6 April each year. Unused allowance from a previous year cannot be rolled over or added to the following year's limit.

You can hold multiple ISAs. Since April 2024, you can open and pay into multiple ISAs of the same type in a single tax year — as long as you stay within your overall £20,000 limit.

Withdrawals can be flexible. With a flexible ISA, if you withdraw money during the tax year, you can replace it without using up additional allowance. Not all ISAs are flexible — check the terms of your specific account.

The allowance is per person, not per household. A couple can each use their own £20,000 allowance — that's £40,000 combined per tax year sheltered from tax.

Cash ISA vs Stocks and Shares ISA — Which is Better?

The right choice depends entirely on your goals and timeline:

| | Cash ISA | Stocks and Shares ISA | |---|---|---| | Best for | Short-term saving | Long-term investing | | Risk | None | Medium to high | | Returns | Fixed/variable interest | Market-dependent | | Access | Usually instant | Usually instant | | Time horizon | 1–3 years | 5+ years |

If you are saving for something in the next one to three years — a house deposit, a car, an emergency fund — a Cash ISA keeps your money safe and accessible. If you are saving for the long term — retirement, financial independence, a child's future — a Stocks and Shares ISA has historically delivered significantly better returns over time.

Many people do both: keep a Cash ISA for short-term needs and a Stocks and Shares ISA for long-term goals.

How to Use the ISA Calculator

Not sure how much your ISA savings could grow? Use our free ISA Calculator to project your savings over time. Enter your initial lump sum, monthly contributions and expected growth rate — and see exactly how much your ISA could be worth in 5, 10 or 20 years.

For Lifetime ISA savers, the calculator also shows the government bonus separately so you can see exactly how much free money you are getting from HMRC.

Frequently Asked Questions

How much can I put in an ISA in 2025/26?

The total ISA allowance for 2025/26 is £20,000 per person. You can split this across different ISA types — for example, £10,000 in a Cash ISA and £10,000 in a Stocks and Shares ISA — as long as the total does not exceed £20,000. The Lifetime ISA has a sub-limit of £4,000 per year within the overall £20,000 allowance.

What happens if I exceed my ISA allowance?

If you accidentally overpay into your ISA, HMRC will contact you to recover any tax that should have been paid on the excess. In most cases, your ISA provider has systems to prevent this, but it is always worth tracking your contributions carefully if you hold multiple ISAs.

Can I have more than one ISA?

Yes. Since April 2024, you can open and contribute to multiple ISAs of the same type in a single tax year, as long as your total contributions do not exceed £20,000. Previously, you could only pay into one of each ISA type per year.

Is ISA interest tax-free?

Yes. All interest, dividends and capital gains earned within an ISA are completely tax-free — both now and in the future. You do not need to declare ISA income on your tax return. This is the core advantage of the ISA wrapper.

What is the deadline to use my 2025/26 ISA allowance?

The 2025/26 ISA allowance deadline is 5 April 2026. Any unused allowance after this date is permanently lost and cannot be carried forward into the 2026/27 tax year.

Can I withdraw money from my ISA?

Yes, you can withdraw from most ISAs at any time. With a flexible ISA, you can also replace withdrawals in the same tax year without it counting as a new contribution. Fixed-rate Cash ISAs may have restrictions on early withdrawal, so always check the terms before opening one.

What is a Lifetime ISA and who can open one?

A Lifetime ISA can be opened by anyone aged 18 to 39. It offers a 25% government bonus on savings of up to £4,000 per year — making it particularly attractive for first-time buyers and younger savers planning for retirement. You must make your first payment before your 40th birthday, but you can continue contributing until age 50.