ISA calculator
What an ISA is actually worth against the same money in a taxable account, once the personal savings allowance runs out.
Covers 2026-27 tax year · rates as at 2026-04-06
Extra after 15 years in an ISA
Estimate£42,455
33,711 of tax avoided at the higher rate
- ISA balance
- £300,521
- Taxable account balance
- £258,066
- Annual ISA allowance
- £20,000
| Contributed each year | £12,000 |
|---|---|
| Personal savings allowance | £500.00 |
| Tax paid outside an ISA | -£33,711 |
| ISA balance | £300,521 |
| ISA advantage | £42,455 |
- The allowance is £20,000 a year and does not carry forward if unused.
- Your personal savings allowance shelters the first £500 of interest a year outside an ISA.
A higher-rate taxpayer gets only £500 of savings allowance, so at 5% a £20,000 balance already exceeds it — everything above is taxed at 40% every year.
Side by side
How this is calculated
The tax drag compounds, the tax does not
Tax taken from interest each year is money that never compounds again. Over 15 years at 5% that lost compounding is worth considerably more than the tax itself, which is why the ISA advantage curve steepens rather than running straight.
taxable interest = interest − personal savings allowanceThe savings allowance shrinks as you earn more
Basic rate gets £1,000, higher rate £500, and additional rate nothing at all. A higher-rate taxpayer with £20,000 at 5% earns £1,000 of interest and is taxed on half of it immediately.
The allowance is annual and does not carry forward
You can pay in £20,000 each tax year. Unused allowance is lost on 6 April rather than accumulating, which is why the March rush exists and why regular contributions beat waiting.
Worked example: £20,000 saved, £12,000 a year at 5%, higher-rate taxpayer
| Already saved | £20,000 |
|---|---|
| Paying in | £12,000 a year |
| Return | 5% |
| Band | Higher 40% |
| Savings allowance | £500 |
|---|---|
| ISA allowance | £20,000 a year |
| Tax outside | 40% on the excess |
The £12,000 fits inside the £20,000 allowance with £8,000 to spare, so there is no reason to hold any of this outside the wrapper.
What this assumes
- A constant return for the whole period.
- Contributions within the annual allowance.
- Interest reinvested rather than withdrawn.
- No platform or fund fees.
Where this commonly goes wrong
- Only one ISA of each type could be subscribed to per year before the rules relaxed — check your provider’s position before opening a second cash ISA in the same tax year.
- Transferring an ISA by withdrawing and re-depositing destroys the wrapper and uses fresh allowance; always use the provider transfer process.
- A flexible ISA lets you replace a withdrawal in the same tax year without using allowance. A non-flexible one does not, and most cash ISAs are not flexible.
Questions
How much can I put in an ISA?
£20,000 across all your ISAs in a tax year. The allowance resets on 6 April and unused room does not carry forward, so a year missed is a year lost permanently.
Is an ISA worth it if I only have a small balance?
It depends on your band. A basic-rate taxpayer with £1,000 of savings allowance needs about £20,000 at 5% before paying any tax; a higher-rate taxpayer with £500 hits that at £10,000, and an additional-rate taxpayer pays from the first pound.
What is the personal savings allowance?
Tax-free interest outside an ISA: £1,000 at the basic rate, £500 at the higher rate, and nothing at the additional rate. It is the reason many basic-rate savers see little benefit from a cash ISA at small balances.
Can I take money out of an ISA?
Yes, at any time from a cash or stocks and shares ISA. Whether you can replace it without using allowance depends on whether the ISA is flexible — most cash ISAs are not, so a withdrawal usually costs allowance.
How do I move an ISA to a better rate?
Use the provider transfer form, never a withdrawal. Withdrawing and re-depositing takes the money outside the wrapper and the re-deposit consumes fresh allowance, which can cost years of accumulated shelter.
Cash ISA or stocks and shares ISA?
Cash for money you need within about five years, where a fall in value would be a problem. Stocks and shares for longer horizons, where the tax shelter is worth more because the returns being sheltered are larger.
Related tools
Sources
General estimate based on published HMRC rates for 2026-27 tax year. Not tax advice. Confirm your position with HMRC or a qualified adviser.
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