ISA Savings Calculator UK

What an ISA is, and why the tax-free part matters

An ISA — Individual Savings Account — is a tax wrapper, not an account type in itself. You can hold cash in a cash ISA, or investments in a stocks and shares ISA, and in both cases you pay no income tax on the interest, no tax on dividends inside the wrapper, and no capital gains tax when you sell. Outside an ISA, savings interest is taxed once it passes your Personal Savings Allowance: £1,000 a year for basic-rate taxpayers, £500 for higher-rate taxpayers, and nothing for additional-rate taxpayers. That allowance sounds generous until the interest adds up. On £50,000 at 5%, a year’s interest is about £2,500 — a basic-rate taxpayer would owe tax on £1,500 of it, roughly £300 a year, every year. In an ISA, that £300 stays yours.

The allowance for 2026/27 is £20,000 per person per tax year, across all your ISAs combined. It is not per ISA — you cannot put £20,000 in a cash ISA and another £20,000 in a stocks and shares ISA. You can split it however you like, and you can pay into more than one ISA of the same type. The allowance resets every 6 April and does not carry over: if you only use £8,000 of it, the other £12,000 is gone. Inside the £20,000, a Lifetime ISA has its own £4,000-a-year limit and earns a 25% government bonus, but it is only for a first home or retirement, and withdrawing for anything else costs you 25% of the whole balance.

How the numbers grow

The pattern is the point: the interest is a bigger share of the final balance the longer you save, because each year’s interest earns interest of its own. After 10 years at 5%, £200 a month has earned £7,056. After 20 years, the same £200 a month has paid in £48,000 and grown to about £82,000 — over £34,000 of interest. Time does more work than the rate does, which is why starting early matters more than finding the highest rate. It is also why the rate you assume matters so much: at 3% instead of 5%, £200 a month for 10 years gives about £28,000 instead of £31,056; at 7% it gives about £34,600. Try all three in the calculator before you plan around one number.

Cash ISA or stocks and shares ISA?

A cash ISA pays interest, and your capital is safe — the balance never falls, and deposits are protected up to £85,000 per bank under the Financial Services Compensation Scheme. The risk is inflation: if your rate is 4% and inflation is 3.5%, your real return is only 0.5%, and if inflation rises above your rate, your money loses buying power even while the balance grows. A stocks and shares ISA invests in funds or shares, and over long periods it has usually beaten cash, but the value can fall — sometimes by 20% or more in a bad year — and there is no guarantee. As a rule of thumb, money you need within five years belongs in cash; money you can leave for ten years or more can afford the ups and downs of investing. Many people hold both: a cash ISA for the emergency fund and short-term goals, and a stocks and shares ISA for the long term.

Common ISA mistakes

• Leaving the allowance unused. It resets every 6 April and does not carry over. Even a small regular payment uses it before the deadline.
• Paying in more than £20,000. The excess does not get tax-free status, and HMRC will ask the provider to remove it. The calculator warns you if your monthly amount would pass the limit.
• Forgetting the Lifetime ISA rules. The 25% bonus is generous, but withdrawing for anything other than a first home or retirement after 60 costs a 25% charge on the whole balance — which takes back the bonus and some of your own money.
• Chasing last year’s best rate. Cash ISA rates change constantly. A rate that was best last month may not be best now, and switching cash ISAs is free — but always transfer, never withdraw and re-deposit, or the money counts against your allowance again.
• Assuming the projection is a promise. The calculator shows what happens at the rate you type in. Real returns vary, fees reduce them, and a stocks and shares ISA can fall. Treat the number as an illustration, not a guarantee.

Using the allowance before 5 April

The ISA allowance resets every 6 April, and anything you do not use is lost. That creates a deadline that matters: if you have cash sitting in a taxable savings account in March, moving up to £20,000 of it into an ISA before 5 April shelters a year’s interest from tax. You do not have to decide which ISA to hold for years — you can put the money in a cash ISA now and transfer it to a stocks and shares ISA later. The transfer rule is the one to remember: always transfer, never withdraw and re-deposit. A transfer keeps the money inside the ISA wrapper, so it does not count against your allowance again. A withdrawal takes it out of the wrapper, and putting it back in counts as a new subscription against the new year’s allowance.

There is no rush to use the full £20,000 if you do not have it — the allowance is a limit, not a target, and putting money into an ISA that you will need next month is a poor idea if it means paying an early withdrawal penalty or selling investments at a loss. But if the money is already saved and is earning taxable interest, the end of the tax year is a genuine deadline. Set a reminder for March, check how much of the allowance you have used, and move what you can. A couple has two allowances — £40,000 a year between them — so a household that plans together can shelter twice as much.

Related: Compound Interest Calculator · Take Home Pay Calculator · Inflation Calculator

Sources: GOV.UK, “Individual Savings Accounts (ISAs)” and “How ISAs work” (allowance £20,000 for 2026/27; Lifetime ISA £4,000 limit); GOV.UK, “Tax on savings interest” (Personal Savings Allowance £1,000 basic rate, £500 higher rate). Checked 13 November 2026.