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Investing basics

ISAs, pensions, index funds and fees – the rules for 2026/27 in plain English. Investments can fall as well as rise; your capital is at risk.

ISAs

An Individual Savings Account shelters savings and investments from UK Income Tax and Capital Gains Tax. You must be a UK resident aged 18 or over (16 or over for a cash ISA under current rules).

  • Allowance: £20,000 in 2026/27, which can be split across cash, stocks and shares, Innovative Finance and Lifetime ISAs. Unused allowance does not roll over. The government has said the £20,000 limit stays until April 2031.
  • Stocks and shares ISA: holds funds, shares, investment trusts, bonds and gilts. Values go up and down.
  • Lifetime ISA (LISA): open aged 18–39 and pay in up to £4,000 a year (counts towards the £20,000) until age 50. The government adds a 25% bonus (up to £1,000 a year). Withdrawals for a first home (up to £450,000) or from age 60 are bonus-free; other withdrawals face a 25% charge, which means you can get back less than you paid in.
  • Junior ISA: £9,000 a year for under-18s.
  • Since 6 April 2024 you can pay into more than one ISA of the same type in a tax year, as long as you stay within the overall limit.
From 6 April 2027: under-65s will be able to put at most £12,000 of the £20,000 into cash ISAs, and interest on cash held inside a stocks and shares ISA will face a charge. The November 2025 Budget also said the government would consult on a new, simpler ISA product for first-time buyers to replace the Lifetime ISA. That change isn't confirmed in law yet, so check GOV.UK for the latest.

SIPPs and pension tax relief

See also our Pensions guide for the State Pension, workplace pensions and a start-age calculator. A Self-Invested Personal Pension is a personal pension where you choose the investments.

  • Tax relief: personal contributions get relief at your marginal rate. With "relief at source", you pay £80 and the provider claims £20 basic-rate relief from HMRC, so £100 goes in. Higher- and additional-rate taxpayers claim the extra through Self Assessment.
  • Limits: relief applies to contributions up to 100% of your UK relevant earnings, or £3,600 gross if you have little or no earnings. The annual allowance (all contributions, including employer) is £60,000, tapered for very high incomes. Once you've flexibly accessed a pension, the Money Purchase Annual Allowance of £10,000 applies.
  • Access age: the normal minimum pension age is 55, rising to 57 on 6 April 2028 (some people have a protected pension age).
  • Tax-free cash: usually up to 25% of your pension, capped by the Lump Sum Allowance of £268,275. The rest is taxed as income when you take it.

The November 2025 Budget announced that salary-sacrifice pension contributions above £2,000 a year will attract National Insurance from April 2029. This affects workplace schemes, not the income-tax relief described above.

Index funds

An index (tracker) fund aims to match a market index, such as the FTSE All-Share or a global index, rather than trying to beat it. They usually have lower ongoing charges than actively managed funds. The value still rises and falls with the market, and the fund's return will be slightly below the index after charges. Things to compare: the ongoing charges figure (OCF), how closely it tracks its index ("tracking difference"), whether income is paid out or reinvested ("inc" or "acc" units), and whether it's a fund (OEIC/unit trust) or an exchange-traded fund (ETF).

Platform fees explained

Your total cost is usually the platform fee (for holding your account) + the fund's ongoing charge + any dealing charges. Platforms usually charge either:

  • a percentage of your pot each year (often tiered, sometimes capped), which suits smaller pots, or
  • a flat fee in pounds, which costs relatively less as your pot grows.

We don't list specific platform prices here until we've verified and sourced them. Check each platform's current charges page.

Fee-impact calculator: percentage fee vs flat fee

With % fee–
With flat fee–
No platform fee–

Assumptions: a single lump sum, no further contributions or withdrawals; growth compounds once a year at a steady rate (real returns vary and can be negative); the percentage fee is taken on the year-end value; the flat fee is taken at each year end; fund charges, dealing costs, inflation and tax are ignored. Figures are illustrations, not forecasts.

Sources (checked 12 October 2026): GOV.UK – Budget 2025 OOTLAR Annex A: rates and allowances (2026 to 2027); GOV.UK – Individual Savings Accounts (ISAs); GOV.UK/HMRC – Cash ISA limit reduction (from 6 April 2027); GOV.UK/HMRC – Tax-free savings newsletter 19 (Nov 2025); GOV.UK – Lifetime ISA; GOV.UK – Tax on your private pension contributions; GOV.UK – Annual allowance; HMRC Pensions Tax Manual PTM062100 – pension age.