Individual Savings Account (ISA)
A UK tax-free savings or investment wrapper, with an annual subscription limit shared across cash, stocks & shares, innovative finance, and Lifetime ISA variants.
An Individual Savings Account (ISA) is the UK’s main tax-advantaged personal saving and investing wrapper. All interest, dividends, and capital gains earned inside an ISA are tax-free — there’s no allowance to worry about and no return to file. The trade-off is the annual subscription limit: £20,000 a year (2026), spread across whichever ISA flavours the saver picks.
Four main flavours sit under the £20,000 cap:
- Cash ISA: deposit account, the simplest form. Useful where the saver wants protection from income-tax-on-interest charges above the Personal Savings Allowance.
- Stocks & Shares ISA: holds funds, ETFs, shares — the workhorse for long-term investing. No CGT, no dividend tax inside the wrapper.
- Innovative Finance ISA: peer-to-peer and crowdfunded lending. Niche, with significant capital-loss risk.
- Lifetime ISA: separate £4,000-a-year sub-cap with a 25% government bonus, restricted to first-home purchase or age-60+ withdrawal.
Spouses can each have their own £20,000 allowance, so a couple can shelter £40,000 a year. The allowance does not roll forward — unused capacity is lost on 5 April. Transfers between providers don’t count against the current-year limit if done properly.
Use the compound interest calculator to model long-term growth inside the wrapper.
Published 10 May 2026