UK ISA (Tax-Free Savings) Calculator

About UK ISA (Tax-Free Savings) Calculator

What Is the ISA Allowance for 2026/27?

The adult ISA allowance for 2026/27 is £20,000, unchanged since 2017/18 and frozen through to April 2031 per the Autumn Budget 2025. The Lifetime ISA sub-limit is £4,000 (which counts toward the £20,000), the Junior ISA allowance is £9,000 (separate from the adult allowance), and the LISA government bonus is 25% up to £1,000 per tax year. Unused allowance does not carry forward - if you don't use it by 5 April, it's gone.

	Cash ISA	Stocks and Shares ISA	Lifetime ISA (LISA)
Annual limit	£20,000 (shared)	£20,000 (shared)	£4,000 (within £20K total)
Returns	Fixed interest (3-5%)	Market returns (variable)	Cash or investments + 25% bonus
Risk	None (FSCS protected up to £85K)	Capital at risk	Depends on cash or investment choice
Access	Instant (usually)	A few days to sell	First home or age 60 only (25% penalty otherwise)
Tax benefit	Interest tax-free	No CGT, no income tax on dividends	Same as above + 25% bonus
Best for	Emergency fund, short-term goals	Long-term investing (5+ years)	First home deposit or retirement

Cash ISA reform from April 2027: the Autumn Budget 2025 introduced a £12,000 annual cap on Cash ISA subscriptions for savers under 65 from 6 April 2027. The £20,000 overall allowance remains, but the extra £8,000 must go into Stocks and Shares, Innovative Finance, or LISA. Savers aged 65+ keep the full £20,000 Cash ISA headroom. The 2026/27 tax year is the last one where under-65s can fill £20,000 in cash alone.

How Big Is the ISA Market?

ISAs are the most popular UK tax wrapper. Per HMRC's Annual Savings Statistics commentary (published September 2025, covering the 2023/24 tax year), 15.0 million adult ISA accounts were subscribed to, up from 12.4 million the previous year - the biggest single-year jump on record. Adult subscriptions totalled £103 billion (up £31.4 billion), with Cash ISAs taking £69.5 billion (67.5% of the value) versus £31.3 billion into Stocks and Shares ISAs. Market value of all adult ISA holdings stood at £872 billion at 5 April 2024, of which roughly £360 billion sat in Cash and £511 billion in Stocks and Shares.

Stocks and Shares ISAs hit 4.09 million accounts subscribed to in 2023/24, the highest number since the wrapper launched in 1999 (HMRC, September 2025). The average ISA subscription works out to around £6,900, well below the £20,000 ceiling - only about 1 in 7 subscribers fill their full allowance. That skews the headline "ISAs save you £54,000" examples - most users would benefit more from simply subscribing consistently than from trying to hit the cap.

How Much Does an ISA Actually Save You?

For a higher-rate taxpayer investing £10,000/year for 20 years at 7%, the ISA wrapper saves roughly £50,000 compared with a taxable general investment account, because dividends (33.75% higher-rate) and capital gains (24% higher-rate, above the £3,000 annual exempt amount) are left untouched.

	ISA (tax-free)	Taxable (higher rate)	Difference
Total contributed	£200,000	£200,000	£0
Growth	£209,692	~£155,000	~£54,692
Final value	£409,692	~£355,000	~£54,692

Worked example: £500/month (£6,000/year) into a Stocks and Shares ISA at 7% for 20 years. Total contributed: £120,000. Final value: approximately £253,800 (the calculator compounds monthly at the effective annual rate). Tax-free growth: £133,800. In a taxable account where a 20% basic-rate drag applies to returns, the same contributions reach around £216,000 - an ISA advantage of nearly £38,000 for a basic-rate saver.

For basic-rate taxpayers the gap is smaller because the Personal Savings Allowance (£1,000) and the £500 dividend allowance cover some returns at low balances. Past roughly £25,000 invested at 4% interest, a basic-rate saver starts exceeding the PSA and the ISA wrapper starts earning its keep. Higher-rate taxpayers only get a £500 PSA and additional-rate taxpayers get none, so the wrapper pays off immediately for them.

Is the Lifetime ISA Worth the 25% Bonus?

The LISA is the best vehicle for first-time buyers purchasing a home worth £450,000 or less, and a useful retirement top-up for under-40s. The 25% government bonus on up to £4,000/year is an instant guaranteed uplift no other product matches. Opened between ages 18 and 39, contributed until age 50, withdrawn penalty-free for a qualifying first home or after age 60.

Worked example: contributing £4,000/year from age 25 to age 50 at 5% annual growth. Personal contributions: £100,000. Government bonus: £25,000. Final value at age 50: approximately £244,000. That's roughly £119,000 of tax-free growth on top of your contributions, plus £25,000 of free money.

The £450,000 property price cap has not moved since the LISA launched in 2017 despite UK house-price inflation of around 30% since. The Nationwide House Price Index put the average UK home at £271,316 in March 2025 - well under the cap - but in London (average £533,926 per Land Registry) and parts of the South East, the cap increasingly excludes first-time buyer purchases. Withdrawing for any non-qualifying reason triggers a 25% penalty on the gross amount, which effectively strips the bonus and 6.25% of your own money.

Cash ISA or Stocks and Shares ISA?

The answer depends almost entirely on time horizon, not on age or risk appetite. Under 3 years: Cash ISA - you cannot afford to sell after a market drop. 3-5 years: either, but Cash gives certainty. 5+ years: Stocks and Shares ISA wins historically - over any rolling 10-year period since 1900 (Barclays Equity Gilt Study 2025 data), UK equities have beaten cash in real terms roughly 91% of the time, with an average real return of about 5.1% versus 1.0% for cash.

Cash ISA rates in April 2026 sit at 4.00-4.75% AER on easy-access accounts per Moneyfactscompare, tracking the Bank of England base rate of 3.75%. Stocks and Shares ISA average returns have been 6-8% nominal over 20+ year periods; short-term returns are volatile and can fall 20-30% in single years. A useful rule from the Investment Association: don't put money you'll need within 5 years into equities, and don't leave money you won't touch for 15 years in cash.

Common ISA Mistakes to Avoid

• Withdrawing and redepositing. Most ISAs are NOT flexible. Withdrawing £5,000 and putting it back uses another £5,000 of your allowance. Check if your ISA is flagged "flexible" before moving money around.
• Transferring by withdrawing. To move between providers or ISA types, always use the official transfer form. Withdrawing and depositing elsewhere burns your allowance.
• Opening multiple ISAs of the same type in one tax year. From April 2024 this is allowed - a 2024/25 HMRC rule change removed the one-of-each-type limit for adult ISAs. For 2026/27, you can subscribe to multiple Cash ISAs with different providers in the same year, but the total across them still can't exceed £20,000. LISAs remain one per tax year.
• Leaving cash in an old variable-rate ISA. Many 2023-era 5% fixed-rate deals rolled over onto 1.5% "loyalty" rates. Check the current rate on every ISA at least annually and transfer if needed.
• Ignoring the employer pension match first. A matched workplace pension contribution is a guaranteed 100% return and comes with tax relief on top. Fill the match before maxing an ISA.
• Panicking in drawdowns. Investors who sold equities in March 2020 and stayed in cash underperformed stayers by roughly 40% over the following five years per Morningstar Mind the Gap 2025.

ISA Strategy by Goal

Different goals suit different ISA combinations. A savings goal calculator helps map a target pot to a monthly contribution; this ISA calculator then checks whether the tax wrapper changes the answer. For retirement projections, combine ISA savings with a pension using the pension drawdown calculator. For raw investment growth without ISA framing, the investment return calculator models the underlying compounding.

Goal	Time horizon	Best ISA	Why
Emergency fund	Instant access	Easy-access Cash ISA	No market risk, FSCS protected
House deposit (first home, <£450K)	1-10 years	LISA first, then Cash ISA	25% bonus is unbeatable
House deposit (not first-time)	1-5 years	Cash ISA	Certainty over growth
Retirement (under 40)	20+ years	LISA + Stocks and Shares	Bonus plus equity growth
Retirement (40+)	5-25 years	Stocks and Shares ISA	Pension usually wins on tax; ISA flexibility helps
Children's university fund	10-18 years	Junior ISA (separate £9K allowance)	Locked to age 18

Tax changes are also worth watching. The dividend allowance dropped from £2,000 to £500 in April 2024, and the CGT annual exempt amount dropped from £12,300 to £3,000 over the same period. Both are frozen at those levels through April 2031 per the Autumn Budget 2025, which pushes more general-account investors into the ISA wrapper each year simply because the alternative is more expensive than it used to be.

All calculations run in your browser. No financial data is sent anywhere.

Sources

• GOV.UK - Individual Savings Accounts (ISAs)
• HMRC - Annual Savings Statistics, September 2025
• GOV.UK - Lifetime ISA rules and bonus
• HM Treasury - Autumn Budget 2025 (ISA freeze and Cash ISA cap from April 2027)
• Moneyfactscompare - Best Cash ISA Rates
• Bank of England - Bank Rate
• Nationwide House Price Index