ISA Calculator
How much an ISA saves versus a taxable account over your horizon — dividend or interest tax at your band, CGT on sale, final values, the ISA advantage and a check against the £20,000 allowance. 2026/27 rates confirmed on gov.uk.
| Total contributed | — |
|---|---|
| ISA value after the period (tax-free) | — |
| Taxable account: annual income and tax on it | — |
| Taxable account: value after income tax drag | — |
| Taxable account: CGT if sold at the end | — |
| Taxable account: net after all tax | — |
| ISA advantage | — |
| Allowance check | — |
| Years to use a £20,000 allowance at your pace | — |
In short
An ISA shelters interest, dividends and capital gains from tax with nothing to declare; outside one, a higher-rate taxpayer in 2026/27 pays 35.75% on dividends above £500, 40% on interest above £500 and 24% CGT on gains above £3,000. Over 20 years that drag typically costs 15–20% of the final pot. The allowance is £20,000 per adult per tax year (£9,000 Junior ISA, £4,000 Lifetime ISA within it), and the cash ISA limit is due to fall for under-65s from April 2027.
Who this is for: UK savers choosing between an ISA and a general investment account.
ISA vs general investment account
- Outside an ISA a higher-rate taxpayer pays 35.75% on dividends above £500, 40% on interest above £500 (£0 above £125,140), and 24% CGT on gains above £3,000. Over 20 years that drag typically costs 10–20% of the final pot.
- Inside an ISA nothing is taxed and nothing is declared; withdrawals are free at any time (flexible ISAs even let you replace money in the same tax year).
- Allowances 2026/27: £20,000 adult, £9,000 junior, £4,000 Lifetime ISA (within the £20,000). Couples get £40,000 a year between them.
- Order of priorities: employer pension match → high-interest debt → emergency cash (premium or easy-access ISA) → pension to your target → stocks and shares ISA → GIA.
- Coming changes: a lower cash ISA limit (£12,000 under 65) and higher savings/dividend/property income tax rates are scheduled from April 2027 — the stocks and shares ISA becomes relatively more valuable.
See also: UK Capital Gains Tax Calculator 2026/27.
Assumptions
- ISA grows at growth + yield with no tax; taxable account pays dividend tax (£500 allowance, band rates) or interest tax (PSA then band rate) each year on the yield, reinvesting the rest.
- CGT on sale at the end at 18% / 24% after the £3,000 exempt amount.
- Band determined from other income; allowance check on year-1 subscriptions only.
Worked example
Contributions total £140,000. In the ISA the pot grows to about £340,600. In a taxable account year-1 dividends of £520 cost just £7 of tax, but as the pot grows the 35.75% dividend tax bites: about £16,100 of income tax over 20 years leaves about £316,400, and selling it all at the end would trigger roughly £32,300 of CGT at 24% on the £137,500 gain — net about £284,100. The ISA is ahead by about £56,500 (19.9%). The £26,000 going in during year 1 exceeds the £20,000 allowance, so £6,000 should wait for 6 April.
Frequently asked questions
What is the ISA allowance for 2026/27?
£20,000 per adult across cash, stocks and shares, innovative finance and Lifetime ISAs (£4,000 LISA sub-limit); £9,000 for a Junior ISA.
Is a stocks and shares ISA worth it for a basic-rate taxpayer?
Yes — the £500 dividend allowance and £3,000 CGT exemption are small, and the ISA removes all future tax and reporting as the pot grows; it costs nothing extra on most platforms.
Can I have more than one ISA?
Yes — since April 2024 you can pay into several ISAs of the same type in one year, as long as total subscriptions stay within £20,000.
What happens to my ISA when I die?
It passes to a spouse or civil partner with an additional permitted subscription equal to its value, keeping the tax-free status; otherwise it forms part of the estate and loses it.
Can I transfer an ISA?
Yes — transfer between providers and between cash and stocks and shares without losing the tax status; always use the provider's transfer process rather than withdrawing.
Do ISAs count for inheritance tax?
Yes, except for AIM shares that qualify for business relief; the spouse exemption and additional permitted subscription apply on death.
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