What is an ISA?
An ISA is a UK tax-advantaged account. Investments held inside an ISA can grow without UK Income Tax on investment income or Capital Gains Tax on gains. For the 2026/27 tax year, the overall ISA subscription limit is £20,000.
A tax wrapper, not an investment
An Individual Savings Account (ISA) is a UK tax wrapper. The ISA itself is not an investment: it is an account within which you can hold eligible cash or investments.
Inside an ISA, you do not pay UK tax on interest, investment income or capital gains generated by assets held in the account.
The annual allowance
For the 2026/27 tax year, the overall ISA subscription limit is £20,000. The tax year runs from 6 April to 5 April.
Your allowance can be spread across eligible ISA accounts, subject to the rules for each ISA type. Tax rules and allowances can change, so current HMRC guidance should always be checked.
Main types of adult ISA
The main adult ISA types are:
Cash ISA
Stocks & Shares ISA
Innovative Finance ISA
Lifetime ISA
Each has different rules and can hold different types of assets.
A Stocks & Shares ISA
A Stocks & Shares ISA can hold eligible investments such as funds, ETFs and shares. The tax wrapper does not remove investment risk: the value of investments can still rise or fall.
An ISA is therefore best thought of as the tax-efficient container around an investment, rather than the investment itself.
This guide is general information about UK tax rules, not tax or financial advice.
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