An ISA (Individual Savings Account) is a tax-free wrapper. Money inside it can earn interest or grow without you paying UK income tax or capital gains tax on it.

The main types

  • Cash ISA: a savings account where the interest is tax-free.
  • Stocks and shares ISA: lets you invest in funds, shares and bonds, with tax-free growth.
  • Lifetime ISA: for a first home or retirement, for people aged 18 to 39 when they open it. The government adds a 25% bonus on up to £4,000 a year. There's a penalty if you withdraw for other reasons.
  • Junior ISA: for children, who can access it at 18.

How much can you put in?

For the 2026/27 tax year, the overall ISA allowance is £20,000. You can split it across different ISA types. Rules can change, so check the current limits on GOV.UK before you pay in.

Cash or stocks and shares?

Ask yourself when you'll need the money. For money you might need in the next few years, cash is usually more suitable. Investing tends to suit money you can leave for at least five years, because values can fall as well as rise.

Before you invest

  • Do you have an emergency fund?
  • Have you dealt with expensive debt like credit cards?
  • Could you leave this money alone for five years or more?
  • Do you understand the fees you'll pay?

The value of investments can go down as well as up, and you may get back less than you put in.