ISA rules for 2025/26

How do ISAs work?

Individual Savings Accounts (ISAs) come in different flavours, but they all let you save or invest tax-free, meaning you keep more of any money you make. If you’re over 18 and a UK resident, or are the parent or guardian of someone under 18, there are four main types of ISA you can apply for:

1. Stocks and shares
2. Cash
3. Lifetime
4. Junior

If you’re a UK crown-employee based overseas (or the spouse or civil partner of one), you can also apply.

Current ISA rules let you put away up to £20,000 each tax year, which you can spread across the different types of ISA. The allowance resets on 6 April each year though, so if you don’t use the full allowance one tax year, you can’t carry anything forward to the next.

Stocks and shares ISA rules

Here’s how the ISA rules can help you invest, tax-free.

• You can now pay into multiple Stocks and shares ISAs in a tax year, but you must keep within the overall ISA allowance of £20,000 per tax year.
• Investments you buy and sell will be sheltered from capital gains tax.
• Any dividends or interest you make will also be free of income tax.
• You can withdraw cash from your ISA at any time.

If you have investments outside that you’d like to transfer into your ISA, a ‘Bed and ISA’ service helps you sell your investments and buy them back in your ISA. Keep in mind that dealing charges, stamp duty, foreign exchange charges and capital gains tax might apply when selling and repurchasing an investment, as well as a difference in the market buying and selling price.

Try our free ISA calculator

Lifetime ISA rules

You’ll still get the tax-free benefits of ISAs, but there are some extra Lifetime ISA rules because of the government bonus on offer.

• You must be aged 18-39 when you open (and pay into) your first Lifetime ISA.
• You can pay in up to £4,000 each tax year – this also counts towards your overall ISA allowance.
• You’ll then get a 25% bonus, up to a maximum of £1,000 a year, on money you pay in.
• You can pay into a valid Lifetime ISA (and get the bonus) until your 50th birthday.
• You can only pay into one Lifetime ISA each tax year.
• If you already have a valid Lifetime ISA and have since turned 40, you can still open an account with AJ Bell, if you transfer your existing Lifetime ISA to us. You’ll just have to wait until your transfer is complete before you can pay money into your new AJ Bell Lifetime ISA.
• You can withdraw cash, but if this isn’t for a qualifying house purchase then you’ll face a 25% government penalty charge on the amount you take out.

Junior ISA rules

There’s even a Junior ISA for under 18s, with its own set of rules.

• A Junior ISA must be opened and managed by a parent (or legal guardian).
• Anyone can pay into the Junior ISA, as it's treated as a gift.
• The Junior ISA allowance is £9,000 per tax year.
• A child can only have one stocks and shares Junior ISA and one cash Junior ISA open at a time.
• You can’t usually withdraw cash from a Junior ISA.
• When the child turns 18, the account becomes a full ISA in the child’s own name and they can manage the ISA and/or withdraw cash whenever they want to.

ISA transfer rules

You can transfer your ISA to another provider, and between different types of ISA. You must leave the transfer process to your ISA provider(s), so that a transfer doesn’t count towards your ISA allowance for the year. If you take money out of an ISA to transfer yourself, you might not be able to pay it back into an ISA without it counting towards your ISA allowance for the year.

There are some extra Lifetime ISA rules when it comes to transfers:

• You can only transfer up to £4,000 into Lifetime ISA from other types of ISA each year.
• Money you transfer into a Lifetime ISA will usually qualify for the 25% government bonus.
• If you transfer money out of a Lifetime ISA to a different type of ISA, it’ll be subject to the 25% government penalty charge.
• The charge won’t be applied if you’re transferring from one Lifetime ISA to another Lifetime ISA.

You can transfer between Junior ISAs too, but you’ll usually need to transfer the whole account. This is because a child can only have one cash Junior ISA and one stocks and shares Junior ISA open at a time.

ISA inheritance rules

• ISAs are part of your estate, so Inheritance Tax might apply.
• You can choose who to leave your ISA to, using your Will.
• Your ISA will keep its tax benefits whilst your estate is being wound up.
• Your spouse or civil partner can inherit an extra ISA allowance – up to the value of your ISA when you die, or when your estate has been wound up, if higher.
• They can still claim this additional allowance even if you leave the ISA assets to someone else.

What happens to my ISA when I die?

ISA allowances

The ISA allowance is the maximum you can put into your accounts per tax year.

More on ISA limits

Individual Savings Accounts

Get the most out of your annual tax-free ISA allowance with our range of accounts.

See our ISAs