The amount you can save into a cash ISA will be cut from £20,000 to £12,000 a year from April 2027 if you're aged 65 or under. This change was announced in the November 2025 Budget.

ISAs

Q: How do I switch ISAs?

If you’re not happy with your current ISA rate, you can switch providers. Never take out the money yourself though, as you’ll lose your tax benefits. Complete an ISA transfer form instead, which is normally part of the sign-up process. Your new provider will then take care of the switch for you. A cash transfer should take no longer than 15 working days. If you transfer a stocks and shares ISA, it should take no more than 30 calendar days.

Save tax-free with an ISA

Earn tax-free interest on your money and make your savings go further with an ISA. Find an account for you and your goals.

Make the most of your ISA allowance

Understand how ISA allowances work and why they matter

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Learn about the different types of ISA available

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What is an ISA?

An ISA (Individual Savings Accounts) is a type of savings account that lets you save or invest a certain amount each year without paying tax on any interest or capital gains you earn.

Every UK resident aged 18 and over can currently save up to £20,000 per tax year, tax-free. That’s the combined limit across all ISA types.

The tax year runs from 6 April to 5 April the following year.

However, from April 2027, the cash ISA allowance for under-65s is dropping to £12,000. Those aged 65 and over will keep their £20,000 allowance, and the stocks and shares ISA allowance will remain at £20,000.

Did you know?

If you don’t use all your ISA allowance in the same tax year, it can’t be rolled over to the next year. You use it or lose it.

Who are ISAs for?

ISAs are particularly handy if you’re likely to use up your Personal Savings Allowance (PSA). That’s the annual tax-free amount you can earn from any savings account, depending on your tax bracket:

Up to £1,000 tax-free interest for basic rate (20%) taxpayers
Up to £500 tax-free interest for higher rate (40%) taxpayers
No PSA for additional rate (45%) taxpayers.

Many savers won’t use up their PSA, so you may not necessarily need the tax benefit of an ISA. But they can certainly be beneficial if you don’t have a PSA or are near your limit.

That said, ISAs aren’t just for those who’ve maxed out their PSA. Many ISAs nowadays offer competitive interest rates – sometimes higher than standard savings accounts.

This means it could be worth opening one simply to make your money go further.

Bear in mind

Inheritance Tax may apply to any money left in your ISA that you want to leave to someone when you die.

If it’s left to your spouse or civil partner, it’s usually covered by the spouse exemption, meaning no Inheritance Tax. But if it’s left to another beneficiary, your ISA value will count as part of your estate.

This means Inheritance Tax may be due if your overall estate value goes over your tax-free threshold.

What’s the difference between an ISA and a regular savings account?

Both ISAs and regular savings account can help you grow your money. The key difference is their tax treatment.

ISA

All interest is tax-free, up to the annual ISA limit
Different ISAs are available for cash savings and investments
Annual contribution limits apply (varies by ISA type)
Unused allowance is lost at the end of the tax year.

Regular savings accounts

Generally designed for simple cash savings
No annual allowance to use or lose
Some accounts limit how much you can pay in per month
Savings are only tax-free up to your PSA – much lower than the ISA limit

What type of ISA can I open?

There are many different types of ISA, with accounts available to save money as cash (no risk to your capital, subject to FSCS protection limits) or investments (your money is at risk).

Easy-access cash ISA

Flexible, allowing access to your money at any time, fee-free. Rates are variable, meaning they can go up or down. Also known as instant-access ISA.

Fixed-rate cash ISA

Get a fixed interest rate by locking your money away for a pre-agreed term (typically 1-5 years). Rates can be competitive. Ideal if you want to avoid the temptation of taking cash out early.

Stocks and shares ISA

Invest in various stocks and the dividends are tax-free. Stocks and shares ISAs are riskier than other ISAs because they can decrease in value.

Junior ISA (JISA)

Save up to £9,000 a year in a JISA towards your child’s future. They can access the account at 16 and withdraw at 18. Available as cash or stocks and shares.

Lifetime ISA (LISA)

Available for 18-39-year-olds who want to save for their first home (worth up to £450,000) or retirement. LISAs are available as cash or stocks and shares.

Innovative Finance ISA (IFISA)

Lend money to others via an online platform. IFISA returns can be higher than with cash ISAs, but you could get back less than you invested if borrowers don’t repay their loans.

Help to Buy ISA

Designed to help first-time buyers get on the property ladder. Not open to new applicants but you can pay into an existing Help to Buy ISA until 2029.

Notice ISA

A type of cash ISA that requires you to wait a certain amount of time (usually between 30 and 180 days) before you can withdraw savings. Penalties apply for early withdrawals.

How do ISAs work?

With so many different account types, rules and allowances, ISAs can get complicated, but we make it simples.

Here's everything you need to know about how ISAs work.

Savings are tax-free

Open as many ISAs as you like

JISAs have different rules

LISAs have a lower allowance limit

Be mindful when withdrawing from an ISA

Switching ISA providers? Always transfer, never withdraw

Moving money between different ISA types

Which is the best ISA for me?

There are different ISAs to suit different savings goals.

Building an emergency fund

Consider an easy-access cash ISA if you’re looking to put some cash aside for a rainy day.

You’ll earn interest on your money while it's in the ISA, and you can take it whenever you need it.

Saving for your first home

Looking to get on the property ladder? A Lifetime ISA can make your savings go much further and get you closer to getting that deposit together.

Planning for later life

Consider a Lifetime ISA if you want to boost your pension.

You can usually open a LISA with just £1 and keep topping it up until you’re 50 (up to £4,000 a year), and get that crucial government bonus.

Bear in mind that LISAs will be replaced with a first-time buyer only ISA, meaning it won’t be suitable for pension planning. If you want to open a LISA, you’ll need to do so before the cut-off, which is likely to be April 2028.

However, you’ll be able to keep your LISA with the existing rules after the cut-off, so it’s still well worth opening one now.

Saving for your child's future

If you want to give your child a head start in life, a Junior ISA could be the right fit.

Just remember the maximum you can pay into a JISA is £9,000 per tax year, and you can only have one cash and one stocks and shares JISA at a time.

Saving for a holiday or wedding

A fixed-term cash ISA is generally suitable for medium-term savings goals (roughly one to five years), such as a wedding or bucket-list holiday.

Locking your cash away can help remove any temptation to take your savings out early or spend it on something else.

For new savers

If you're just getting into the habit of saving, consider an easy-access cash ISA. It’s flexible and generally a low-risk, simple way to save tax-free.

A notice ISA could be another option. Its main benefit is that it can help with financial discipline, so you're more likely to put money aside and leave it there until the notice period ends.

Different providers and accounts will offer different notice periods, so you can choose how much flexibility you need.

Growing your money over the long term

If you have a lump sum to save for the future (10+ years), why not consider a stocks and shares ISA? This account could offer greater growth potential than cash savings.

Just remember that the value of your investments can go up or down, so make sure you’re comfortable with the risk before committing.

Quick tip

You don’t have to pick just one ISA. If you have a few different savings goals, you can open more than one account.

It’s all tax-free as long as you stay within the ISA allowance.

How do I apply for an ISA?

Opening an ISA is generally quick and easy. You can do it online with most providers, or online or in-branch (if the provider has one).

You’ll need to be at least 18 to open a standard adult ISA, and 16-17 years old to open a JISA. If you have a child under 16, you’ll need to open a JISA on their behalf.

You also can’t have exceeded your total ISA allowance for the year already.

Providers will ask for your personal details like your name, address, job and National Insurance number, along with ID.

Is there a credit check involved when opening an ISA?

No, there’s no credit check involved when opening an ISA. That's because ISAs aren’t credit products (they don’t have an overdraft), meaning your credit score won’t be considered or affected as part of your application.

What our expert says...

“While ISAs might have lost some of their appeal thanks to the introduction of the personal savings allowance, they still offer a simple way to save tax-free. And they’re flexible as you can often start with just £1 and transfer them as many times as you like to get the best rate.”

Ele Clark, Personal finance and insurance expert

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Innovative finance ISAs

Explore how to use your tax-free allowance to invest in P2P lending

See our savings account guides

FAQs

Who can open an ISA?

Cash, stocks and shares and innovative finance ISAs (IFISA) are open to any UK resident aged 18 or over.

Lifetime ISAs are open to adults aged 18-39 inclusive.

16-17-year-olds can open their own junior ISA (JISA). If you have a child under 16, you’ll need to open a JISA for them, and they can take control of the account when they turn 16.

How many ISAs can I have?

ISA allowance rules mean you can have as many ISAs as you like.

You can also pay into as many ISAs as you like, as long as you stay within the annual ISA limit.

The only exceptions are the junior ISA (JISA) and Lifetime ISA (LISA). You can have up to two active JISAs at a time – one cash and one stocks and shares.

You can have multiple LISAs, but you can only pay into one with a tax year.

That said, if you have multiple active cash ISAs, it’s worth combining them into one – whichever pays the highest interest rate. This will make your savings easier to manage and you’ll maximise on interest.

How do I switch ISAs?

If you’re not happy with your current ISA rate, you can switch providers. Never take out the money yourself though, as you’ll lose your tax benefits.

Complete an ISA transfer form instead, which is normally part of the sign-up process. Your new provider will then take care of the switch for you.

A cash transfer should take no longer than 15 working days. If you transfer a stocks and shares ISA, it should take no more than 30 calendar days.

Can I get an ISA for my children?

Yes, you can open a Junior ISA on behalf of your child if they’re under 16.

Money deposited in the account belongs to the child, but they can’t control the account until they’re 16, or withdraw cash until they’re 18.

How do I find the best ISA rates?

The best way to find the best ISA rates is to shop around. Rates change all the time, especially for cash ISAs, so always check what’s out there before opening an account.

Bear in mind that fixed-rate ISAs don’t always pay higher rates than easy-access accounts. Some easy-access ISAs pay similar – or even higher – rates.

And if a better rate comes along later, you can always switch, as long as your ISA is flexible.

Which is best – an ISA or savings account?

You no longer need to save into an ISA to earn tax-free interest, so the benefits aren’t as great as they once were. Thanks to the introduction of the personal savings allowance, basic rate taxpayers can now earn up to £1,000 interest a year tax-free.

For most people, that means all their savings will be tax-free. So, when comparing ISAs, it’s also worth comparing regular savings accounts to see if they offer higher returns.

Where ISAs can be particularly beneficial over time is if you open a Lifetime ISA or stocks and shares ISA.

What is a flexible ISA?

A flexible ISA is the simplest type of ISA that lets you withdraw money whenever you want. This makes it one of the most accessible options for savers.

However, flexible ISAs can sometimes pay lower interest rates than fixed-rate or notice ISAs. Although, that’s not always the case – it’s possible to find flexible ISAs with competitive rates nowadays, so it’s always worth comparing.

Can I hold different currencies in an ISA?

No, according to the HMRC, you can only deposit and save Great British Pounds (GBP) into an ISA. If you’re looking to make a foreign currency deposit into an ISA, a currency conversion will need to be made at the same time.

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Reviewed 02 Sept 2026 by Sajni Shah Personal finance expert

Sajni is passionate about finding money products to help you make great financial decisions. She keeps track of the latest trends and evolving markets to find new ways to help you save money.

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¹ Based on Trustpilot ratings (July 2026).