Where this fits
Which allowance to fill first depends on your tax position now, your likely position in retirement, and when you might need the money.
Sunny Bharj
Independent Financial Adviser
Tony Springer
Independent Financial Adviser
Often both. Pensions give tax relief going in but lock the money away until at least 55. ISAs are reachable at any time and tax-free coming out.
Both shelter growth from UK income tax and capital gains tax.
2026/27 allowances. Limits and tax treatment depend on your circumstances and change at Budgets.
Contribute enough to get every pound your employer will match.
Put money you may need within five years in an ISA.
If you pay 40% or 45% tax now and expect to pay basic rate in retirement, pension relief is worth more to you than ISA flexibility.
Money in both lets you choose which to draw from each year, which can lower the tax you pay.
If an employer will match your contributions, pay in enough to get the full match before anything else.
Yes. The allowances are separate and using one does not affect the other.
You can still pay into a pension and get tax relief, up to a modest annual amount, even with no earned income at all. An ISA has no earnings requirement.
Yes, and usually towards having some of both, so you can choose which pot to draw from each year and keep your taxable income inside a lower band.
It uses the same £20,000 allowance. For money you may need soon that is the right home for it; for money meant to grow over decades, cash has historically struggled against inflation.
Which allowance to fill first depends on your tax position now, your likely position in retirement, and when you might need the money.
Independent Financial Adviser
Independent Financial Adviser
Your first call is with an Account Manager and is at no cost to you. Tell us what is on your mind: a pension you have lost track of, a fixed rate ending, a will you keep meaning to write.