Stocks and Shares ISA rules, plainly
An ISA is a tax wrapper: money you invest inside one grows free of UK tax on the gains, dividends and interest. Here's the plain-English version of the rules - the yearly allowance, what you can and can't hold, and the two taxes that don't disappear. General information only, and the numbers below are for the 2026/27 tax year.
How much can I put in an ISA?
You can put up to £20,000 in per tax year (6 April to 5 April), spread across all your ISA types combined - not £20,000 each. A Lifetime ISA sits inside that with a £4,000 sub-limit (plus a 25% government bonus); a Junior ISA has its own separate £9,000 allowance. Allowances can change between tax years - gov.uk always has the current figures.
What can go in a Stocks and Shares ISA?
- Shares - Individual company shares listed on a recognised stock exchange - UK names on the London Stock Exchange, US names like Apple, and many more. AIM-listed shares count too.
- Funds and ETFs - Unit trusts, OEICs, index funds and exchange-traded funds (ETFs) - the usual way beginners get instant diversification in one purchase.
- Investment trusts - London-listed closed-end funds (like a share that holds a basket of other things).
- Bonds and gilts - Corporate bonds and UK government bonds (gilts), or funds that hold them.
- Cash - You can hold money as cash inside a Stocks and Shares ISA between investments.
What can't you hold in a Stocks and Shares ISA?
- Cryptocurrency - You can't hold Bitcoin or other crypto directly in an ISA, and US spot-Bitcoin ETFs (like IBIT) aren't available to UK retail investors inside one.
- Unlisted shares - Shares not listed on a recognised exchange - for example a private company or a friend's business - generally can't go in a Stocks and Shares ISA.
- Physical assets - Property, gold bars, art or collectibles held directly. (A gold ETF or fund is fine - it's the physical thing you can't hold.)
- Spread bets and CFDs - Leveraged trading products aren't ISA-eligible - and they're a different, much higher-risk activity from owning shares and funds.
Which taxes does an ISA not remove?
An ISA shields you from UK tax - but not everything. Dividends from US shares still have 15% US withholding tax deducted at source (a W-8BEN form keeps it at 15% rather than 30%), and buying most UK shares still triggers 0.5% stamp duty, even inside the ISA. ETFs and AIM shares are exempt from that stamp duty.
What happens if you take money out, or move providers?
This is where ISA rules cost people money quietly, because none of it is visible from the outside - the allowance you lose is simply never mentioned again.
- Some ISAs are "flexible", and most people never find out - If your ISA is flexible, you can take cash out and put the same amount back during the same tax year without it counting against your allowance again. If it is not, the money you put back uses fresh allowance - so taking out £5,000 and replacing it costs £5,000 of the year's room. Whether an ISA is flexible is up to the provider; gov.uk's line is simply that your provider can tell you. Separate rules apply to a Lifetime ISA.
- Changing provider is a transfer, not a withdrawal - You contact the provider you are moving to, fill in an ISA transfer form, and they collect the money; you can move all of it or part of it. Taking the money out yourself instead is the expensive version - in gov.uk's words, "you will not be able to reinvest that part of your tax-free allowance again". That shelter is gone permanently, and no provider can reinstate it. Transfers take up to 15 working days for a cash ISA and 30 calendar days for other types.
- A Lifetime ISA has a 25% charge that can leave you short - Money out of a Lifetime ISA for anything other than a first home costing £450,000 or less, reaching 60, or terminal illness carries a 25% withdrawal charge - and it applies to the whole amount, your own money and the government bonus together. gov.uk's own example: pay in £800, receive the £200 bonus, and £1,000 is showing; withdraw it and the charge leaves £750. £800 went in and £750 came back. The bonus is 25% of what you pay in, while the charge is 25% of the larger total - which is why they do not cancel out.
What would change for ISAs on 6 April 2027?
Everything in this section is a proposal, not a rule yet.
The government announced these changes at the Autumn Budget on 26 November 2025. HMRC published the draft wording on 25 June 2026 and ran a technical consultation on it that closed on 2 August 2026. HM Treasury says the regulations will be laid before Parliament in the autumn of 2026, and that they would then come into force on 6 April 2027.
Until they are laid and made, the wording can still change. Read this as the current proposal rather than as settled law. We checked it on 5 August 2026 and we will rewrite this section when the final rules are published.
Nothing changes before 6 April 2027
For the rest of this tax year, which runs 6 April 2026 to 5 April 2027, the rules on the rest of this page apply in full. The overall ISA limit is £20,000. All £20,000 of it can go into a cash ISA, at any age. Interest paid on cash held inside a stocks and shares ISA is not taxed. You can still move money from a stocks and shares ISA into a cash ISA.
The cash ISA limit would fall to £12,000 for most people
From 6 April 2027 the most that most people could pay into cash ISAs in a tax year would be £12,000, down from £20,000.
The overall ISA limit is not changing. It stays at £20,000 across all your ISAs added together. £20,000 less £12,000 leaves £8,000, and that £8,000 could only go into a stocks and shares ISA or an innovative finance ISA. If it goes nowhere, it is simply unused.
This is a limit on new money paid in during a tax year. Money already sitting in a cash ISA is not touched by it and does not have to be moved.
The age rule is not what most websites say it is
The draft sets the limit by your age at the END of the tax year, which is 5 April. The £12,000 limit would apply in any year in which you are 64 or younger on 5 April. HMRC states the same rule from the other side: the £20,000 cash limit applies from the start of the tax year in which you turn 65.
So if you are 64 on 6 April 2027 and you turn 65 at any point before 5 April 2028, the full £20,000 cash limit would apply to you for the whole of that tax year, even though you are 64 for most of it.
The common mistake: bank, building society and broker pages almost all describe this as a limit for savers under 65. That is the wrong test. It reads your age on the day, and it wrongly locks out people who turn 65 later in the same tax year. The draft wording is 64 or under at the end of that year.
Interest on cash held inside an investment ISA would be taxed
Today, if some of your money is sitting as uninvested cash inside a stocks and shares ISA and it earns interest, that interest is not taxed and there is nothing to report.
From 6 April 2027 the draft rules would tax that interest, and the equivalent return on a Sharia compliant account. Your ISA provider would work out the amount and pay it straight to HMRC. There is nothing for you to declare and no allowance to claim. The Personal Savings Allowance does not apply to anything paid inside an ISA, and no small amount escapes it.
Two things about this are widely reported wrongly. First, it is tax on your interest, collected from your provider because that is simpler than collecting it from you. It is not a fee your provider swallows. In plain terms, cash held inside an investment ISA would stop being tax free.
Second, the draft does not fix the rate at 22%. It charges income tax at the savings basic rate for the year. That rate is separately due to rise from 20% to 22% in April 2027, which is where the 22% figure comes from. If the savings basic rate moves again, this moves with it.
Nothing else inside the ISA is affected. Your shares and funds, the growth on them and the dividends they pay all stay outside this.
You could no longer move money from an investment ISA into a cash ISA
Transfers would become one way. Moving money from a stocks and shares ISA or an innovative finance ISA into a cash ISA would not be allowed. Moving cash ISA money the other way would still be allowed, and transfers between providers of the same type would be unaffected.
As with the £12,000 limit, this restriction would not apply once you reach 65 by the end of the tax year.
An investment ISA could not be held entirely in money market funds
A money market fund holds very short term deposits and similar instruments, and behaves much like cash.
The draft says the investments in a stocks and shares ISA, not counting cash, must not be 100% money market funds. That phrase not counting cash is important and is usually left out: cash sitting in the account is excluded from the sum, so this rule and the interest rule above are measured on different things.
HM Treasury calls these cash-like assets and says the list contains money market funds only. Shares, funds, investment trusts, exchange traded funds, corporate bonds and gilts, including short dated gilts, are not on the list. HMRC has said the list is initially limited to money market funds, which means it could be added to later.
Unlike the £12,000 limit and the transfer restriction, this rule and the interest charge would still apply to people aged 65 and over.
What the draft does not yet answer
- Whether a cash Lifetime ISA is caught by the interest charge or the money market fund rule. The Treasury factsheet does not mention the Lifetime ISA at all, so its treatment is genuinely not set out yet.
- The factsheet describes the money market fund restriction as applying to non-cash ISAs generally, while the draft wording attaches it to the stocks and shares part of an ISA. Those two are not the same, and the made regulations should settle it.
- What would happen to an account that is already entirely in money market funds on 6 April 2027.
None of this changes what an ISA is or removes the tax shelter on shares, funds, their growth or their dividends. If you want to follow it to source, both the factsheet and the draft wording are linked below. Not sure which kind of account any of this applies to? The eight UK account types are set out side by side, with the rules for each.
ISA questions, answered
How much can I put in an ISA?
For the 2026/27 tax year the total allowance is £20,000, spread across all your ISA types (cash, stocks and shares, and so on). A Lifetime ISA has its own £4,000 sub-limit inside that £20,000; a Junior ISA has a separate £9,000 allowance. Figures can change between tax years, so check gov.uk for the current numbers.
How many ISAs can I have?
You can hold as many ISAs as you like, and since April 2024 you can pay into more than one of the same type in a single tax year. The catch is the shared £20,000 limit: it is spread across all of them combined, not £20,000 into each. Junior ISAs have their own separate allowance.
Does transferring an ISA use up my allowance?
No. Moving money already in an ISA from one provider to another is a transfer, not a new contribution, so it does not touch this year's £20,000 allowance. Use the provider's official ISA transfer process rather than withdrawing the cash yourself, which would lose the tax wrapper.
What happens to my ISA when I die?
An ISA is not exempt from inheritance tax: its value counts as part of your estate. A surviving spouse or civil partner, though, gets a one-off extra allowance (an Additional Permitted Subscription) equal to the ISA's value, so they can shelter that amount on top of their own limit. gov.uk has the detail.
Can I hold Bitcoin or a Bitcoin ETF in a Stocks and Shares ISA?
No. Cryptocurrency can't be held directly in an ISA, and the US spot-Bitcoin ETFs people often ask about aren't available to UK retail investors inside one. This is a common surprise.
Do I still pay any tax inside an ISA?
Inside an ISA there's no UK tax on your gains, dividends or interest. But two costs don't vanish: dividends from US shares still have 15% US withholding tax taken at source, and buying most UK shares still triggers 0.5% stamp duty - even inside the ISA.
Cash ISA or Stocks and Shares ISA?
A cash ISA is a savings account - your money doesn't fall in value, but it can be out-paced by inflation over long periods. A stocks and shares ISA invests in shares and funds - it can grow more over the long run but can also fall. Which fits depends on your timeframe, not a rule.
If I take money out of my ISA, can I put it back?
Only if your ISA is flexible, and only within the same tax year. A flexible ISA lets you replace what you took out without it counting against your allowance again; a non-flexible one does not, so the money you pay back in uses fresh allowance. Providers decide whether their ISA is flexible, so the one place to check is your own provider. Lifetime ISAs work differently.
How do I move my ISA to a different provider?
Through a transfer, not a withdrawal. You contact the provider you want to move to and complete an ISA transfer form, and they arrange it - you can move all of your ISA or part of it. If you take the money out yourself instead, gov.uk is explicit that you will not be able to reinvest that part of your tax-free allowance again, and nobody can restore it afterwards. Transfers take up to 15 working days for a cash ISA and 30 calendar days for other types.
What is the 25% charge on a Lifetime ISA?
Taking money out of a Lifetime ISA for anything other than a first home costing £450,000 or less, reaching age 60, or terminal illness triggers a 25% withdrawal charge on the whole amount - your own money and the government bonus together. gov.uk's example: pay in £800, receive a £200 bonus, and £1,000 is showing; withdraw it and the charge leaves £750. The bonus is 25% of what goes in and the charge is 25% of the larger total, so they do not cancel out.
Is the £12,000 cash ISA limit definitely happening?
Not yet. It was announced at the Autumn Budget in November 2025 and HMRC published draft regulations in June 2026, but the regulations have not been laid before Parliament or made. HM Treasury says they will be laid in the autumn of 2026 to take effect on 6 April 2027. Until then the wording can change, and the current £20,000 cash ISA limit applies in full.
Does the 2027 cash ISA limit apply if I am 64?
It depends on your age at the end of the tax year rather than on the day you pay in. The draft applies the £12,000 limit where you are 64 or under on 5 April. HMRC puts it the other way round: the £20,000 cash limit applies from the start of the tax year in which you turn 65. So someone who is 64 in April 2027 and turns 65 before 5 April 2028 would keep the full £20,000 for that whole year, even though most pages describe this as a limit for savers under 65.
Will my stocks and shares ISA be taxed at 22% from 2027?
No. Under the draft rules the charge would fall only on interest paid on uninvested cash sitting inside a stocks and shares or innovative finance ISA. Your shares and funds, the growth on them and the dividends they pay would stay free of UK tax. The 22% is the savings basic rate for that year rather than a fixed figure, and your provider would pay it to HMRC so there is nothing for you to declare.
Want to see the tax saving in pounds? Try the ISA tax calculator, or start with the plain-English basics. This is general information, not advice about your situation, and ISA rules can change - always check gov.uk or your provider for the latest.
Where these figures come from
The rules and allowances on this page come from the official sources below. Tax rules change, so check the source for the current position.
- gov.uk: Individual Savings Accounts (ISAs) the annual allowance and account types
- gov.uk: How ISAs work what you can hold, and transfers
- HMRC: Tax when you buy shares 0.5% stamp duty, payable inside an ISA too
- IRS: About Form W-8BEN the form behind the 15% US withholding rate
- gov.uk: Withdrawing your money flexible ISAs - replacing what you take out in the same tax year
- gov.uk: Transferring your ISA the transfer form, and the allowance you cannot get back
- gov.uk: Withdrawing money from your Lifetime ISA the 25% charge, and the £800 in / £750 out example
- HM Treasury: ISA reform 2027 anti-circumvention rules factsheet the 2027 package, and that regulations are still to be laid
- HMRC: draft Individual Savings Account (Amendment) Regulations 2026 the draft wording itself, including the age test and the interest charge
- HMRC: changes to tax rates for property, savings and dividend income the savings basic rate rising to 22% from April 2027
Last reviewed 3 August 2026. We re-check the rules and figures on this page when they change.