TL;DR
The 2026/27 ISA allowance is unchanged at £20,000 (£4,000 for Lifetime ISAs, £9,000 for Junior ISAs). Best-buy fixed-rate cash ISAs currently pay up to 4.65% as of mid-May 2026, with top easy-access ISAs paying around 4.30%. With the Bank of England base rate held at 3.75% and several major banks repricing savings products downward through April and May, the window for the highest current rates may be narrowing.
The Individual Savings Account (ISA) allowance for 2026/27 remains at £20,000 per adult, unchanged from the 2025/26 tax year. The allowance can be split across cash ISAs, stocks and shares ISAs, innovative finance ISAs, and Lifetime ISAs (subject to a £4,000 Lifetime ISA sub-limit). The Junior ISA allowance for under-18s remains at £9,000 for 2026/27. All figures are confirmed by HMRC and supported by Section 695 of the Income Tax (Trading and Other Income) Act 2005 as amended.
Best-buy ISA rates as of mid-May 2026
Cash ISA rates have moved selectively downward through April and the first half of May 2026 as the Bank of England held the base rate at 3.75% on 30 April 2026. Best-buy fixed-rate cash ISAs are currently offering up to 4.65% for one-year fixes, with five-year fixes pricing slightly lower as the market prices in expected base rate cuts later in 2026.
Top easy-access ISAs are paying around 4.30% as of the second week of May 2026, down from peaks of 4.55% earlier in 2026. Regular savers, which are not generally available as ISAs but provide useful comparison, pay up to 7.1% on small monthly contributions capped at a few hundred pounds.
The Personal Savings Allowance (PSA) means basic-rate taxpayers can earn £1,000 of interest tax-free outside an ISA each tax year (£500 for higher-rate taxpayers, nil for additional-rate taxpayers). For savers below the PSA threshold, the case for an ISA is weaker than the headline rate suggests; for savers above it, the ISA wrapper preserves the full interest.
How to use the £20,000 allowance
The allowance is per adult per tax year, refreshed each 6 April. Unused allowance does not carry over. Married couples and civil partners each have their own £20,000 allowance, so a couple can shelter £40,000 a year. Allowances can be split across any combination of permitted ISA types, subject to the £4,000 Lifetime ISA sub-limit.
From the 2024/25 tax year onward, savers have been able to pay into multiple ISAs of the same type within a single tax year. This includes opening more than one cash ISA in the same year and contributing to all of them, as long as the total contributions stay within the £20,000 limit. The change resolves a long-standing complaint about ISA rules.
The Lifetime ISA: 25% bonus, narrow rules
The Lifetime ISA (LISA) is available to UK residents aged 18 to 39 at account opening, with contributions allowed up to age 50. The annual contribution cap is £4,000, which counts towards the overall £20,000 ISA allowance. The government pays a 25% bonus on contributions, paid monthly, providing up to £1,000 of free money per year.
LISA funds can be withdrawn tax-free for two purposes: buying a first home (with a property value cap of £450,000), or at age 60 and over. Withdrawals for any other purpose attract a 25% charge, which effectively recoups the government bonus and applies a small additional penalty on the saver's own contributions. The Treasury opened a consultation in late 2024 on possible LISA reforms but had not announced legislative changes as of May 2026.
Junior ISAs and the under-18s
The Junior ISA allowance remains £9,000 per child for 2026/27. Junior ISAs can be held as cash JISAs or stocks and shares JISAs, and a child can have one of each type. Contributions can be made by parents, grandparents, family, or friends. The account is held in the child's name and locked until age 18, at which point it converts to an adult ISA and the £20,000 adult limit applies.
For new parents, opening a Junior ISA at birth and contributing the full £9,000 each year would produce a substantial sum by age 18 even at conservative growth assumptions, though investment in stocks and shares JISAs carries market risk that cash JISAs do not.
Why rates are softening
Savings rates broadly track the swap rate curve and the Bank of England base rate. With base rate held at 3.75% in March and April 2026, and the MPC signalling at least one further rate cut over the remainder of 2026, expected forward rates for short-term sterling are slowly easing. Savings providers compete more aggressively at certain tenors than others depending on their funding mix.
The narrowing of fixed-rate savings premia over easy-access products is also notable. The premium for locking in five years versus easy-access is currently around 35 basis points, a narrow margin that does not strongly compensate savers for the loss of flexibility. This dynamic is consistent with a market that prices low confidence in significant near-term base rate cuts.
How ISAs compare to other tax-efficient wrappers
Pensions remain the most tax-advantageous wrapper for retirement saving, especially for higher and additional-rate taxpayers, because of the tax relief on contributions. However, with the April 2027 changes bringing most unused pension funds within the inheritance tax net, ISAs gain a relative advantage for inheritance-focused saving. An ISA passes to a spouse with the existing balance and the deceased's unused allowance can be transferred as an additional permitted subscription (APS).
For most savers, the practical hierarchy starts with using employer pension matching, then ISA contributions to the £20,000 limit, then non-ISA savings within the PSA, with additional pension contributions considered for higher-rate tax relief.
Editorial disclaimer: Tax rules and allowances depend on individual circumstances and may change. Rates cited reflect best-buy availability in mid-May 2026 and change frequently. This article is for general information only and does not constitute financial advice.
Frequently asked questions
What is the ISA allowance for 2026/27?
The total ISA allowance for 2026/27 is £20,000 per adult. Within that, the Lifetime ISA sub-limit is £4,000. The Junior ISA allowance is £9,000 per child.
Can I open more than one cash ISA in 2026/27?
Yes. Since the 2024/25 tax year, savers can open and contribute to multiple ISAs of the same type within a single tax year, as long as total contributions across all ISAs stay within the £20,000 limit.
What is the best fixed-rate cash ISA rate today?
Best-buy fixed-rate cash ISAs are currently offering up to 4.65% for one-year fixes as of mid-May 2026. Rates change frequently and the exact best-buy depends on the term, minimum deposit, and provider eligibility.
Should I use a cash ISA or a regular savings account?
For savers earning less than the Personal Savings Allowance threshold (£1,000 for basic-rate taxpayers, £500 for higher-rate, nil for additional-rate), the tax benefit of an ISA is reduced. For savers above the threshold, the ISA wrapper preserves the full interest from tax.
Does my ISA pass to my spouse if I die?
Yes. A surviving spouse or civil partner can claim an Additional Permitted Subscription (APS) equal to the value of the deceased's ISA at the date of death, on top of their own £20,000 annual allowance.
How we verified
This article draws on HMRC published ISA allowance figures for 2026/27, the Bank of England April 2026 MPC announcement, MoneyFacts and MoneyWeek published best-buy data from May 2026, and HM Treasury Lifetime ISA consultation documents. Tax thresholds reflect 2026/27 published rates. ISA legislative basis is the Income Tax (Trading and Other Income) Act 2005, Section 695 onward, as amended.
