ISA season 2026: How to make the most of your £20,000 allowance

What is the ISA allowance for 2025/26?

Every UK resident aged 18 or over gets a £20,000 ISA allowance each tax year. You can split this across different ISA types, cash ISAs, stocks and shares ISAs, innovative finance ISAs, and lifetime ISAs, but the total cannot exceed £20,000.

Your allowance resets on 6 April each year. Any unused portion from the 2025/26 tax year (ending 5 April 2026) cannot be carried forward. If you don’t use it, you lose it.

Why does ISA season matter more this year?

From 6 April 2027, savers under 65 will only be able to deposit £12,000 into cash ISAs per tax year. Those aged 65 and over will retain the full £20,000 allowance.

This means the 2026/27 tax year, which begins on 6 April 2026, represents the final chance for younger savers to maximise cash ISA contributions at the current £20,000 level. Anyone planning to use ISAs for tax-efficient savings may want to consider using their full allowance while it’s still available.

How to use your ISA allowance effectively

Check your contributions so far. Log into any ISAs opened since 6 April 2025 to see how much of your £20,000 allowance you have left.

Consider your time horizon. ISAs come in different formats to match different needs:

Easy-access cash ISAs work for emergency funds or money you might need at short notice. Rates are typically competitive and you can withdraw without penalty.

Notice accounts require you to give advance warning (typically 30-120 days) before withdrawing. They can offer a middle ground between easy access and fixed rates.

Fixed-rate cash ISAs offer higher interest in exchange for locking your money away for a fixed period, typically ranging from one to five years. These accounts don’t allow access to your funds during the term, so they’re best suited to savings you’re certain you won’t need until maturity.

Transfer old ISAs if rates have dropped. ISAs opened in previous years may now be paying lower rates than current best-buy accounts. You can transfer previous years’ ISA savings to a new provider without using your current year’s allowance, but you must use the official ISA transfer process – simply withdrawing and redepositing will lose the tax-free status.

Don’t split unnecessarily. While you can now open multiple cash ISAs in one tax year, spreading small amounts across many providers creates administrative burden without real benefit. Focus on the best rates for your needs.

What happens if you don’t use your full allowance?

Nothing dramatic. Any money already in ISAs from previous years keeps its tax-free status and continues earning interest without tax. You simply miss the opportunity to shelter an additional £20,000 from tax this year.

However, given the allowance reduction from April 2027, anyone with available funds to save should consider maximising their contributions in both the 2025/26 and 2026/27 tax years. This effectively locks in £40,000 of tax-free savings before the lower limit takes effect.

Stocks and shares ISAs: An alternative approach

The £20,000 allowance isn’t limited to cash. Stocks and shares ISAs offer the same tax benefits, capital gains are tax-free, and you pay no tax on dividends.

With the capital gains tax annual exemption now just £3,000 and dividend tax rising from April 2026, ISAs have become more valuable for investors. The dividend allowance has shrunk to £500, meaning most people with investments outside ISAs will pay tax.

An easy-access cash ISA remains the sensible choice for shorter-term savings and emergency funds. For longer-term wealth-building, stocks and shares ISAs may be worth considering, though investment returns can go down as well as up, and past performance is not a reliable indicator of future performance.

Your ISA season action plan

Before 5 April 2026:

• Calculate how much of your 2025/26 allowance you’ve used
• Decide how much you can comfortably add before the deadline
• Compare current cash ISA rates across easy access, fixed, and notice accounts
• Transfer any old ISAs paying poor rates to better accounts
• Make your contribution before 5 April to secure this year’s allowance

After 6 April 2026:

• Note this is your final year to use the full £20,000 cash ISA allowance (if under 65)
• Plan to maximise 2026/27 contributions before allowance drops in 2027
• Set a reminder for March 2027 for your reduced allowance year

The tax year ends 5 April 2026 for this year’s allowance. More significantly, if you’re under 65, the next two tax years represent your final opportunity to use the full £20,000 cash ISA allowance before it reduces to £12,000 from April 2027.

Your eligible deposits with OakNorth are protected up to £120,000 by the Financial Services Compensation Scheme (FSCS). Tax treatment depends on individual circumstances and may be subject to change in the future.

This information is provided for general guidance only and does not constitute financial advice. If you are unsure whether a product is appropriate for your circumstances, you should consider seeking financial advice