Tax news · June 2026
The ISA allowance is frozen and the rules keep shifting, but ISAs are more valuable than ever. Here is where they stand and how to make the most of them.
ISAs have quietly become one of the most valuable tools in personal tax, not because they have improved, but because almost everything around them has got worse. As the savings allowance, the dividend allowance and the capital gains allowance have all been cut, the tax free shelter of an ISA has become far more useful. At the same time the rules have been shifting, so it is worth a clear look at where ISAs stand.
The overall ISA allowance remains 20,000 pounds a year, frozen rather than rising with inflation, and within that you can split your money between a cash ISA and a stocks and shares ISA as you choose. Everything inside an ISA grows free of Income Tax and Capital Gains Tax, and interest and dividends inside it are tax free and never need reporting. There has been a lot of debate about the future of ISAs, including a proposed British ISA that was later dropped, and ongoing discussion about whether the cash ISA limit should be reduced to encourage more investing, so the detail may change, but the core tax free benefit remains.
This affects every saver and investor. Savers are finding that higher interest rates push them over the much smaller Personal Savings Allowance, so a cash ISA protects interest that would otherwise be taxed. Investors are finding that the 500 pound dividend allowance and the 3,000 pound capital gains allowance no longer shelter much, so holding shares and funds in a stocks and shares ISA protects both the income and the growth. In short, the squeeze on other allowances has made the ISA the obvious home for savings and investments.
The main message is to use your allowance, because it cannot be carried forward, so any unused part is lost at the end of the tax year. For investors with holdings outside an ISA, the bed and ISA technique, where you sell investments and buy them straight back inside the ISA, gradually moves a portfolio into the tax free wrapper, often using the capital gains allowance to do so with little or no tax. Couples should use both of their allowances, sheltering up to 40,000 pounds a year between them.
Our honest view is that ISAs are now close to essential rather than just nice to have, precisely because the government has cut the other allowances so hard. Anyone holding meaningful savings or investments outside an ISA, while having unused ISA allowance, is very often paying tax they could legally avoid. We would encourage savers to use the allowance every year as a habit, and investors to move holdings into an ISA steadily over time. Whatever happens to the detailed rules, sheltering income and gains from tax is only going to become more valuable.
We help you make the most of your ISA allowance, move investments into the tax free wrapper efficiently, and plan across a couple so both allowances are used. Book a free call back and we will look at your savings and investments.
The overall ISA allowance is 20,000 pounds per tax year, which you can split between a cash ISA and a stocks and shares ISA. The allowance cannot be carried forward, so unused amounts are lost at the end of the year.
Because the savings, dividend and capital gains allowances have all been cut sharply, more of your interest, dividends and gains are now taxable outside an ISA, so the tax free shelter of an ISA protects far more than it used to.
We will help you use your allowance and shelter your savings and investments from tax. Book a free call back.