Master Individual Savings Accounts (ISAs) and save up to £6,750 in tax annually. Your complete guide to tax-free investing in the UK.
ISA Allowance
£20,000
Total you can save across all ISAs per tax year
Tax Savings
Up to £6,750
Annual tax saved vs taxable accounts (45% taxpayer)
Tax Year
6 April - 5 April
Use it or lose it - resets annually
ISA Transfers
Unlimited
Switch providers anytime without losing tax-free status
An Individual Savings Account (ISA) is a UK government scheme that allows you to save or invest money without paying any tax on the returns. Think of it as a tax-free wrapper around your savings and investments.
💡 The ISA Magic:
In a normal savings account, you pay tax on interest. In a normal investment account, you pay tax on dividends and capital gains. In an ISA, you pay ZERO tax on any returns. Over 20-30 years, this can save you tens of thousands of pounds.
2025/26 ISA Allowance
£20,000
You can save up to £20,000 across all your ISAs in the 2025/26 tax year (6 April 2025 - 5 April 2026)
Invest in stocks, bonds, funds, and ETFs with tax-free growth and income
Best For
Long-term wealth building and higher returns
Typical Returns
5-8% average annually
Risk Level
Medium to High
| Feature | Stocks & Shares | Cash ISA | Lifetime ISA | Innovative Finance |
|---|---|---|---|---|
| Max Contribution | £20,000 | £20,000 | £4,000 | £20,000 |
| Gov. Bonus | None | None | 25% | None |
| Risk Level | Medium-High | Very Low | Medium | High |
| Returns | 5-8% | 3-5% | 6-10%* | 4-8% |
| FSCS Protected | ||||
| Flexible Withdrawals | ||||
| Age Restrictions | 18+ | 18+ | 18-39 | 18+ |
See how much tax you could save by using an ISA
Total Tax Saved with ISA
£65,659
Decide between Cash ISA (safe, lower returns) or Stocks & Shares ISA (higher potential returns, more risk). Consider a Lifetime ISA if you're under 40 and saving for your first home or retirement.
Compare ISA providers based on fees, investment options, and platform features. Popular options: Vanguard, Hargreaves Lansdown, Interactive Investor, Trading 212, Freetrade.
Complete the application online. You'll need proof of ID and address. Most providers can verify you digitally in minutes.
Transfer money from your bank account. You can contribute up to £20,000 in the current tax year (or £4,000 for LISA).
For S&S ISAs, choose your investments (stocks, funds, ETFs). Many platforms offer ready-made portfolios if you're unsure.
Try to use your full £20,000 allowance each year. Unused allowance doesn't roll over, so you lose it forever.
For long-term investing (5+ years), S&S ISAs typically outperform Cash ISAs significantly due to higher returns.
If under 40 and buying your first home, the 25% government bonus on a LISA is unbeatable (£4k → £5k instantly).
Keep 3-6 months of expenses in a Cash ISA as an emergency fund. Higher rate taxpayers benefit most.
If you have old ISAs with poor returns or high fees, transfer them to better providers. Your tax-free status is protected.
Contribute at the start of the tax year (April) rather than the end (March) to maximize time in the market.
You can only pay into one Cash ISA and one S&S ISA per tax year. Opening a second voids the tax benefits.
Unless buying first home or over 60, you'll lose 25% of your withdrawal (including the government bonus). Very expensive mistake!
Unused ISA allowance expires on 5 April each year. If you can afford to save more, do it – you can't make it up later.
Don't put long-term investments in a Cash ISA or emergency funds in a S&S ISA. Match the ISA type to your goal.
Platform fees, fund fees, and trading fees can significantly eat into returns. Compare costs across providers.
Stock market dips are normal. Selling during downturns locks in losses. S&S ISAs are for 5+ year investments.
No tax on dividend income (normally 8.75-39.35%)
No tax on profit from selling (normally 10-20%)
No tax on savings interest (normally 20-45%)
💡 Example Tax Savings:
If you have £50,000 in a S&S ISA earning 7% annually (£3,500), with £1,500 from dividends and £2,000 from capital gains:
What is the ISA allowance for the 2025/26 tax year?
Track your ISA investments, monitor performance, and get AI-powered insights with TrioWealth