ISA Allowance 2026/27: Limits, Rules and What's Changing

The ISA allowance for 2026/27 is £20,000, unchanged, covering the tax year from 6 April 2026 to 5 April 2027. That headline is the easy part. The reason this year matters more than a normal one is that a substantial package of ISA reform takes effect on 6 April 2027, and several of the decisions worth making in response need to be made inside the 2026/27 year, not after it.

This guide sets out the current limits, the rules people most often get wrong, and what is changing next April.

The limits for 2026/27

The £20,000 is a total across all adult ISA types, not per wrapper. You can split it however you like: £20,000 in one, or £4,000 into a Lifetime ISA and £16,000 across cash and stocks and shares, or any other combination adding to £20,000.

The Junior ISA allowance is separate and belongs to the child. A parent funding a JISA in full does not reduce their own £20,000.

The rules people get wrong

You can pay into more than one ISA of the same type. Since April 2024 you can open and subscribe to multiple cash ISAs or multiple stocks and shares ISAs in the same tax year, provided the total stays within £20,000. The old one-of-each-type-per-year rule is gone, and it is still widely repeated. Lifetime ISAs remain the exception: one per tax year.

Allowances do not carry forward. Unused allowance at midnight on 5 April is gone. There is no equivalent of pension carry forward.

Flexible ISAs behave differently from non-flexible ones. In a flexible ISA you can withdraw and replace money within the same tax year without the replacement counting against your allowance. In a non-flexible one, the replacement is a fresh subscription. Flexibility is a provider choice, not a legal default, and plenty of ISAs are not flexible. Check before you rely on it.

Transfers are not subscriptions. Moving an existing ISA to a new provider using the proper transfer process does not touch this year’s £20,000, however large the balance. Withdrawing the money and paying it in yourself does, which is why you should always use the transfer form. Our guide to transferring a stocks and shares ISA covers the mechanics.

Current-year money moves in full. If you transfer money you have subscribed this tax year, it must move in its entirety. Previous years’ money can be transferred in part.

What changes on 6 April 2027

HMRC’s ISA reform factsheet sets out the detail. Four changes matter.

1. The cash ISA limit falls for under-65s. From 6 April 2027 the maximum you can subscribe to a cash ISA in a tax year is £12,000 if you are under 65, and stays at £20,000 if you are 65 or over. The overall £20,000 ISA allowance is unchanged; the difference has to go into a stocks and shares, Lifetime or Innovative Finance ISA.

2. A 22% charge on cash interest inside a non-cash ISA. A flat-rate 22% charge will apply to any interest or alternative finance return paid on cash held within a non-cash ISA. This closes the obvious workaround of parking cash in the cash account of a stocks and shares ISA.

3. All-cash portfolios stop qualifying. A portfolio composed entirely of cash-like assets, such as money market funds only, becomes a non-qualifying investment inside a stocks and shares ISA. Diversified portfolios that include some cash-like exposure remain acceptable; it is the 100% cash-like case that is caught. Ordinary shares, bonds, ETFs and investment trusts are not treated as cash-like.

4. Transfers from non-cash ISAs into cash ISAs are prohibited, with an exemption for people aged 65 and over.

What this means for 2026/27 decisions

Three practical implications follow, and none of them require guessing at policy.

If you are under 65 and hold a large cash balance outside an ISA, 2026/27 is the last year you can shelter up to £20,000 of it in cash. From April 2027 that drops to £12,000 a year. If the money is genuinely earmarked for cash, using this year’s allowance properly is worth more than usual.

Do not plan to use a stocks and shares ISA as a cash parking space from 2027. The 22% charge and the all-cash rule are aimed squarely at that, and the anti-circumvention framing means marginal structures are unlikely to survive.

Consider whether cash is the right wrapper at all. For money you will not need for five years or more, the historic case for equities over cash is strong and the reform makes it stronger at the margin. That is a question about time horizon rather than tax, and we cover it in cash ISA versus stocks and shares ISA and in our note on risk tolerance and time horizon.

The Lifetime ISA is on notice

The Lifetime ISA continues under existing rules for now: £4,000 a year within the overall allowance, a 25% government bonus, open between 18 and 39, contribute until 50, and a 25% withdrawal charge if you take the money out other than for a first home under the £450,000 property price cap or after age 60.

The government has said it intends to replace the LISA with a First Time Buyer ISA and has launched a consultation, with implementation discussed for 2028 but not settled. Existing account holders can continue subscribing under existing rules in the meantime.

The rational position: if you are on track to buy a first home under the price cap, the 25% bonus remains one of the best returns available on cash and is worth using. If you are unsure whether you will buy, or likely to buy above the cap in your area, the withdrawal charge is a genuine cost and the case is much weaker.

A note on the personal savings allowance

The ISA is not the only shelter. Basic rate taxpayers can earn £1,000 of savings interest tax free, higher rate taxpayers £500, and additional rate taxpayers nothing. The starting rate for savings can shelter more for people with low earned income.

That is why the ISA question is not automatic for small balances: a basic rate taxpayer with modest savings may pay no tax on the interest anyway. It becomes decisive as balances grow, for higher and additional rate taxpayers, and for anyone whose interest is likely to exceed the allowance at current rates.

Deadlines

The tax year ends on 5 April 2027. Providers set earlier internal cut-offs, often several working days before, particularly for transfers and for payments by cheque or bank transfer rather than debit card. If you intend to use the full allowance, do not leave it to the first week of April.

Frequently asked questions

What is the ISA allowance for 2026/27? £20,000 across all adult ISA types combined, for the tax year running 6 April 2026 to 5 April 2027. The Junior ISA allowance is a separate £9,000 belonging to the child, and the Lifetime ISA is capped at £4,000 within the overall £20,000.

Is the ISA allowance changing in 2027? The overall £20,000 allowance stays. What changes from 6 April 2027 is the cash ISA subscription limit, which falls to £12,000 for savers under 65 while remaining £20,000 for those aged 65 and over, alongside a 22% charge on cash interest inside non-cash ISAs.

Can I pay into two ISAs in the same tax year? Yes, including two of the same type, as long as total subscriptions stay within £20,000. The exception is the Lifetime ISA, where you can subscribe to only one per tax year.

Does transferring an ISA use up my allowance? No, provided you use the formal transfer process rather than withdrawing and re-depositing. Transfers of any size leave the current year’s £20,000 untouched.

What happens if I go over the ISA allowance? HMRC identifies over-subscriptions after the tax year ends and will normally instruct the provider to remove the excess, with any income or gains on it becoming taxable. Do not attempt to fix it by withdrawing the money yourself; contact the provider or HMRC first.

Should I use my full cash ISA allowance in 2026/27? If you hold cash outside a tax wrapper, are under 65, and expect to keep holding cash, then yes, since this is the last tax year in which the full £20,000 can go into a cash ISA. If the money has a horizon of five years or more, the more useful question is whether it should be invested rather than held in cash at all.