What is the ISA allowance for 2025/26?
The ISA allowance for 2025/26 remains at £20,000, allowing UK residents aged 18 or over to invest this amount tax-free across various ISA types within the tax year running from 6 April 2025 to 5 April 2026. This annual limit applies to the combined total of all your adult ISAs, such as Cash ISAs, Stocks and Shares ISAs, and Lifetime ISAs, and is set by HMRC without any confirmed increases for the upcoming year.
Eligibility requires you to be a UK resident, though non-residents can maintain existing ISAs but cannot contribute new funds. For instance, if you earn interest or dividends outside an ISA, you may face tax charges, but within the ISA wrapper, growth is sheltered. This £20,000 cap has been stable since 2017/18, making it a key tool for tax-efficient saving amid rising living costs.
Tip: Track your contributions carefully to avoid exceeding the limit, as overpayments can lead to penalties including withdrawal of excess funds plus any interest earned.
Cash ISA allowance details
For 2025/26, the Cash ISA allowance is unchanged at up to £20,000 within the overall ISA limit, providing a safe haven for savings with tax-free interest. Unlike previous years where rumours swirled about a potential cut to £10,000, the government has shelved such plans following public backlash, as reported by BBC News in July 2025.
This means you can allocate the full annual ISA allowance to a Cash ISA if desired, though splitting across types often maximises returns. Interest rates on Cash ISAs currently hover around 4-5% for easy-access options, shielding savers from basic-rate tax on earnings up to £1,000 otherwise taxable. Always compare providers, as variable rates can fluctuate with the Bank of England base rate.
Key benefits of Cash ISAs in 2025
- Protection from income tax on interest, vital for higher earners.
- Flexibility with easy-access or fixed-term products to suit liquidity needs.
- Integration with the broader ISA ecosystem for diversified tax-free growth.
For official rules, see the GOV.UK guide on how ISAs work.
| ISA Type | Allowance Limit | Eligibility Notes |
|---|---|---|
| Adult (Cash, Stocks & Shares, etc.) | £20,000 total | UK residents 18+ |
| Cash ISA | Up to £20,000 | Within adult total; tax-free interest |
| Junior ISA | £9,000 | Separate; for children under 18 |
| Lifetime ISA | £4,000 (within adult total) | 18-39 years; government bonus |
Junior and other ISA types
The Junior ISA allowance for 2025/26 stands at £9,000, a separate limit from adult allowances designed to help parents build tax-free savings for children under 18. Funds become accessible at age 18, with no changes announced for this year despite ongoing reviews of child savings incentives.
For investment-focused savers, the Stocks and Shares ISA allowance mirrors the £20,000 adult cap, allowing tax-free capital gains and dividends on shares, funds, or bonds. The Lifetime ISA offers up to £4,000 annually with a 25% government bonus for first-home or retirement goals, but remains within the overall limit. Approximately one-third of Britons use ISAs, mostly for cash, yet shifting to stocks could yield higher long-term returns.
Explore more on Hargreaves Lansdown’s ISA allowance page for investment specifics.
Recent changes and budget rumours
No major changes to the ISA allowance 2025 are confirmed post the Spring Budget, though 2024 introduced flexibility like partial transfers between ISAs without using up allowance. Rumours of halving the Cash ISA limit circulated earlier in 2025 but were paused due to industry warnings that it could raise mortgage costs by reducing savings pools.
Watch the Autumn Budget for potential tweaks, as fiscal pressures might influence tax-free thresholds. For context on prior shifts, the allowance has frozen at £20,000 since 2017, outpacing inflation and prompting calls for an increase. Stay updated via MoneySavingExpert’s ISA guide.
How to maximise your ISA allowance
To make the most of your £20,000 ISA allowance 2025, diversify across Cash and Stocks & Shares ISAs for balanced risk and reward—perhaps £10,000 in cash for security and the rest in investments for growth. Use the carry-forward rule sparingly, as it only applies to unused allowance from the previous year if you were eligible then, and transfers don’t reset your limit.
Common pitfalls include forgetting the tax year reset on 6 April or mixing non-ISA funds, which could trigger taxes. For top picks, check our best ISA 2025 guide.
Frequently asked questions
What is the ISA allowance for 2025/26?
The ISA allowance for 2025/26 is £20,000 for adults, covering all contributions to Cash ISAs, Stocks and Shares ISAs, and similar products in one tax year. This limit, unchanged from 2024/25, enables tax-free growth on savings and investments, helping around one-third of UK adults shield earnings from HMRC. Eligibility hinges on UK residency, and exceeding it risks penalties, so monitoring via provider statements is essential for compliance.
Will the ISA allowance increase in 2025?
Current indications suggest no increase to the ISA allowance 2025, with the £20,000 cap likely to persist amid budget constraints, though advocates push for inflation-linked rises. Past freezes since 2017 have eroded real value by over 20%, prompting debates in policy circles. Expert strategies include maximising via transfers to preserve allowance, but always verify post-budget announcements for any shifts.
What is the maximum Cash ISA allowance for 2025?
The maximum Cash ISA allowance for 2025 is £20,000, fully utilising the annual ISA limit for tax-free interest on deposits. Despite earlier proposals to cap it at £10,000—which were halted after backlash—this preserves savers’ options in a high-interest environment. For beginners, starting with an easy-access Cash ISA builds habits; experts might ladder fixed-rate terms to lock in rates against anticipated base cuts.
When does the 2025/26 ISA tax year start?
The 2025/26 ISA tax year starts on 6 April 2025 and ends on 5 April 2026, aligning with the UK fiscal calendar for all allowances and declarations. This timing means contributions from late March 2025 count towards 2024/25, so planning ahead avoids rushed decisions. Understanding this reset helps in strategies like carrying over unused allowance, ensuring you don’t miss tax-efficient opportunities.
What is the Junior ISA allowance for 2025?
The Junior ISA allowance for 2025 is £9,000, a dedicated tax-free wrapper for children’s savings managed by parents until age 18. Separate from adult limits, it supports long-term goals like education, with investments growing compound without tax drag. Risks include market volatility in Stocks versions, so balancing with Cash options suits conservative families.
Can I carry over unused ISA allowance from 2024/25 to 2025/26?
Yes, you can carry over unused ISA allowance from 2024/25 to 2025/26 if you were eligible in the prior year, potentially adding up to three years’ worth for a £60,000 boost. This rule, introduced in 2015/16, aids lump-sum investors but requires meticulous tracking to claim accurately. Advanced users leverage it post-bonuses, but beware: only prior-year shortfalls qualify, not future projections.
