Sunny Bharj
Independent Financial Adviser
Tony Springer
Independent Financial Adviser
£20,000 a year, across as many ISAs as you like, with no tax on the growth or the income. The rules change in April 2027.
An ISA is a wrapper, and not an investment in itself. What goes inside it can be cash, funds, shares or a mixture, and what the wrapper does is keep the returns outside income tax and capital gains tax.
Since April 2024 you can pay into more than one ISA of the same type in a tax year, so long as the total stays within the allowance. The Lifetime ISA is the exception, and it is also the one with a charge attached to getting your money back.
gov.uk, checked 23 September 2026. 2026/27 allowances.
The Lifetime ISA allowance sits inside the £20,000, so paying in the full £4,000 leaves £16,000 for everything else. The allowance runs to 5 April and cannot be carried forward.
You can take the money out without charge in only three situations: buying your first home costing £450,000 or less, at least twelve months after your first payment in; reaching 60; or terminal illness with less than twelve months to live.
Any other withdrawal carries a 25% charge on the amount you take out. That is not the same as handing the bonus back. Save £1,000, receive a £250 bonus, and a withdrawal of the whole £1,250 attracts a charge of £312.50, leaving £937.50. You get back less than you put in.
Save £1,000 into a Lifetime ISA, receive a £250 bonus, then withdraw the lot for any other reason and you get back £937.50. Less than you paid in.
A surviving spouse or civil partner gets an additional allowance on top of their own, equal to the value in the deceased's ISA at the date of death or when the account is closed. It is an extra allowance and not an inherited account, so the money itself still passes under the will or the intestacy rules.
The deceased's account becomes a continuing account of a deceased investor and closes on the earlier of the executor closing it, the estate administration finishing, or three years after the death. The couple must have been living together at the date of death, and an ISA manager is not obliged to accept the additional subscription.
Since 6 April 2024, yes, provided the total stays within the £20,000 allowance. The Lifetime ISA is the exception: one per tax year. A child may hold only one Junior ISA of each type.
Yes, and at present the interest on it is paid without tax. From 6 April 2027 that interest becomes chargeable at 22%, deducted by the ISA manager.
They do different jobs. A pension gives tax relief going in and locks the money away until at least 55, rising to 57 in 2028. An ISA is funded from taxed income and is available whenever you want it. Most people end up using both.
It forms part of your estate for inheritance tax. A surviving spouse or civil partner receives an additional ISA allowance matching its value, which lets them keep the same amount sheltered.
For money you may need within a few years, yes. For money meant to grow over decades, cash has historically struggled against inflation. From April 2027 the amount you can put into cash each year is also limited if you are under 65.
Only where the ISA is a flexible one, and not all are. In a flexible ISA money withdrawn and replaced in the same tax year does not use your allowance twice. Check with the provider before relying on it.
The value of investments and any income from them can fall as well as rise and you may get back less than you invest. Tax treatment depends on your circumstances and on current rules, both of which can change.
For a first home under £450,000 or for money you will not touch until 60, the 25% bonus is hard to beat. Outside those, the withdrawal charge bites.
Read the answer →Yes, and since April 2024 you can pay into more than one of the same type in a year, as long as the total stays within £20,000.
Read the answer →Independent Financial Adviser
Independent Financial Adviser
A first conversation of about twenty minutes, 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.