What happens if you don’t use your annual ISA allowance?
The new financial year is well underway, and that means that for every UK taxpayer the annual ISA allowance resets.
From 6 April 2026 until 5 April 2027, up to £20,000 can be saved or invested without taxation, in a Cash ISA, Stocks and Shares ISA, Junior ISA, Lifetime ISA and/or an Innovative Finance ISA. And the easiest way to maximise your ISA allowance is to start early.
Why the ISA allowance matters
The annual ISA allowance is the best opportunity for savers and investors to maximise their returns. Not only are these funds exempt from taxation, but any interest payments, dividends or returns can be reinvested tax free so that you can benefit from the effect of compound inflation. That means you can effectively earn interest on your interest, year after year, without any tax payments taken. Over time this can really add up.
However, you can only invest £20,000 until 5 April 2027. After this date, the new tax year begins and the ISA allowance resets. If you haven’t used the previous year’s allowance, you lose it.
Use it or lose it – what the catchphrase really means
ISA allowances do not roll over. Once the tax year ends on 5 April, any unused portion of your allowance is gone for good. You can’t carry it forward, and you can’t make up for it in future years by contributing more than the annual cap.
For example, if you only invest £5,000 in one tax year, you cannot contribute £35,000 the next year to compensate. You are still limited to the standard annual allowance. Over time, under-utilising your annual allowance can significantly reduce the total amount you’re able to shelter from tax, as well as causing you to lose out on the ability to compound your interest.
For example, if you consistently underuse your ISA allowance by £10,000 per year, over 10 years, that’s £100,000 that could have been growing in a tax-efficient wrapper. Depending on your investment returns, the long-term difference could be substantial, particularly if you’re investing in higher-yielding opportunities such as property-backed lending.
How to maximise your ISA allowance
The best way to make the most of your annual ISA allowance is to start allocating money as early as possible in the year. £20,000 is the equivalent of approximately £1,666 per month. If you can afford to set this aside, a direct debit or standing order can make the allocation process much easier. Just take some time at the start of the year to decide which ISA accounts to use, set up an automated monthly payment system, and you won’t have to revisit your strategy until April 2027.
Choosing the right ISA
Your annual ISA allowance can be spread across a range of ISA accounts, allowing you to diversify across stocks and shares, cash, and peer-to-peer loans. How you choose to invest will depend on your individual risk profile. If you are risk averse, you may prefer to allocate most of your funds into a Cash ISA, where yields tend to be lower but more consistent. With stocks and shares, you can choose to either hand-pick your own investments or place your money into a tracker fund. However, geopolitical risk and macroeconomic volatility tends to hit the equity markets first, so depending on the makeup of your portfolio, you could incur losses in the event of a market shock.
Innovative Finance ISAs – or IFISAs – occupy something of a middle ground. Returns are relatively consistent, and typically higher than Cash ISAs. The IFISA bracket covers off peer-to-peer loans, crowdfunding investments, open ended property funds and long-term asset funds. For P2P IFISAs such as the Loanpad IFISA, investors earn money through loan repayments from the platform’s borrowers. The key risk here is that the borrower is unable to make one or more of these repayments, and ultimately could fall into difficulty, placing investor capital at risk. However, a good IFISA manager will conduct strict due diligence on every new borrower, ensuring that only the highest quality borrowers are able to access the platform’s lenders. Loanpad also takes collateral in the form of property on every loan that it approves, ensuring that there is a way for investors to recoup their capital should the borrower default. Furthermore, Loanpad invests alongside its investors, sharing the risk.
Learn more about the Loanpad IFISA here.
| Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more. |
Loanpad passes £135m milestone as growth journey continues.
Loanpad’s investor loanbook has surpassed £135m, demonstrating the property-lending platform’s ability to grow organically and steadily over time.
This milestone has been reached without any capital losses to investors to date, thanks to the platform’s rigorous due diligence process and ability to originate good quality, property-backed loans.
“Since Loanpad was established eight years ago, we have remained true to our mission – to deliver competitive, risk-managed returns for our investors simply and effectively,” says Neil Maurice, chief operating and finance officer at Loanpad.
“Today we are proud to say that our investor loanbook has grown to more than £137m, with zero capital losses to date. We have managed this growth throughout a global pandemic, fluctuating interest rates, and multiple macroeconomic shocks.
“This ability to grow our platform and deliver for our investors and borrowers is a testament to the hard work of our team, and our commitment to strong due diligence throughout the lifetime of every loan.
“Our business model now has a proven track record, and we are looking towards our future growth, onboarding more lending partners and supporting more borrowers across the UK at a time when fair financing is becoming increasingly hard to find.”
A focus on disciplined growth
Loanpad was launched in 2018, with the aim of enabling retail investors to back short-term property loans in the UK. Investments are raised from a combination of a select group of lending partners, as well as Loanpad’s ever-growing pool of retail investors. Currently, our lending partners share of the loans is more than £104m, while our retail investor base has invested more than £136m. This means that our live loanbook is currently valued at more than £240m.
We believe that our phenomenal growth story is due to the diligent and conservative management of the platform, as well as the loyalty of our investor base.
In just eight years, Loanpad has become an established part of the UK’s property lending market, growing its loanbook from £10m in 2020, to £50m in 2022 and £137m today.
Transparency has always been at the heart of Loanpad’s business. We are registered with the FCA, and we report all lending statistics on our website. We don’t charge any fees to our investors, but we do make a margin on the rate of interest paid by borrowers.
We also prioritise conservative loan-to-value (LTV) ratios on all property loans, to ensure that our investor capital is protected in the event of a borrower default. As a result of these measures, not a single investor has lost a penny of their capital through Loanpad.
This approach has helped us to build a loyal community of backers who choose to keep investing with Loanpad year after year.
“We would like to thank our investor base for all of their support over the years, and for trusting us with their hard-earned money,” says Maurice. “We are here for the long term, and we intend to maintain the highest standards by choosing great loans and delivering great returns for our investors.”
| Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more. |
P2P INSIDER
Supercharge your understanding of Peer to Peer investing todayAs the 5 April 2026 tax year deadline approaches, many UK savers and investors are reviewing their finances and deciding how best to make use of their remaining ISA allowances and other tax-efficient allowances.
This year, the annual ISA allowance 2025/2026 remains at £20,000. This means that all UK taxpayers are entitled to shelter up to £20,000 in a Cash ISA, Stocks and Shares ISA and/or an Innovative Finance ISA (IFISA) account. If you invest £10,000 before 5 April 2026, the remaining £10,000 of your ISA Allowance 2025/2026 will disappear when the new April tax year begins.
The £20,000 ISA allowance can be kept in just one account, or across a variety of different accounts to allow for portfolio diversification. For example, stock market volatility may mean that more risk-averse investors might prefer to keep a larger sum in a Cash ISA account this year, while more risk-aware investors may wish to consider an IFISA for the first time.
ISA allowance variables for the 2025/2026 tax year
Not all ISAs follow the annual £20,000 allowance rule. There are two exceptions – the Lifetime ISA (LISA) and the Junior ISA (JISA).
Up to £4,000 can be held within a LISA, but this counts towards your overall £20,000 annual ISA allowance, so if you chose to max out your LISA this year you would have just £16,000 of your remaining ISA allowance available for other ISA accounts. The LISA is unique among other ISAs as it can only be used to buy a first home or for a pension fund. Furthermore, LISA users can only pay into the account until they are 50 years old, and pension withdrawals can’t begin until the age of 60.
Meanwhile, up to £9,000 can be added to a Junior ISA during the April-to-April tax year. This money can be invested or saved on behalf of a child, and therefore it does not impact on the £20,000 annual ISA allowance that adults are subject to. In theory, you could invest £20,000 in your own ISA accounts, plus an additional £9,000 in the account of your child, effectively meaning that you are sheltering £29,000 of your income per year from unnecessary taxation.
How to use your £20,000 ISA allowance in the 2025/26 tax year
The UK government has indicated that it is interested in reforming the ISA landscape. This has already resulted in the announcement that the Cash ISA allowance will be reduced from the current £20,000 per year to £12,000 per year from April 2027. With the prospect of change ahead, this could be a good time to ensure that you are making the most of the current ISA allowance and maximising your chances of making tax-free returns.
Before deciding how to allocate your ISA allowance, it is important that you understand the difference between the three main account options.
- Cash ISAs are viewed as lower-risk, offering variable or fixed interest rates across one, two or five years, closely tied to the Bank of England base rate. If the base rate goes down, variable rate Cash ISAs may also see their interest rates reduced.
- Stocks and Shares ISAs offer a wide range of potential returns – including the possibility of negative returns, or losses. Investors can choose from hundreds of options, including equities, bonds, and alternatives, as well as tracker funds which mirror the performance of the world’s key stock markets. A financial advisor can help you to put together an ISA-eligible stocks and shares portfolio, or you can manually select your own stocks and shares if you feel confident in your ability to read the market and understand risk.
- FISAs allow investors to lend money through authorised peer-to-peer lending platforms, as well as long-term asset funds (LTAFs) and open-ended property funds, while still benefiting from the tax advantages of an ISA wrapper. For investors who are comfortable with the risks associated with lending, this can offer an attractive way to generate potentially higher yields than traditional savings accounts, without experiencing the daily fluctuations associated with the stock market.
With the annual ISA allowance, the motto is ‘use it or lose it’. Even if you are not able to invest the full £20,000, any savings and investments made within the tax wrapper can help to protect your capital and returns from unnecessary taxation, while benefiting from the effects of compound interest over time – just as long as you don’t make any unplanned withdrawals. The allowance resets on 6 April, so this is the season to spring into action and come up with an ISA strategy that will carry you through the next financial year as well.
| Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more. |
The end of the tax year is quickly approaching, with this year’s ISA deadline expiring on 5 April 2026. That means that investors and savers have just a few weeks left to decide where to keep their money before the ISA deadline, in order to avoid unnecessary taxation.
In an investment landscape shaped by persistent inflation, shifting interest rate expectations and geopolitical volatility, it can be hard to decide between the relative safety (but limited yield) of a Cash ISA, and the opportunity (but relative risk) of a Stocks and Shares ISA or an Innovative Finance ISA (IFISA).
When making a last-minute ISA choice ahead of the ISA deadline, you need to consider your broader financial objectives, whether this is tax efficiency, capital preservation, or long-term wealth generation. It is also important to be aware of the level of risk that you are comfortable with, before choosing a new investment account.
So how do you decide where to put your money before the ISA deadline arrives?
Understanding your options before the ISA deadline
All UK taxpayers have four main options when it comes to ISA accounts. These are:
- Cash ISAs – offered by most banks and building societies, with rates often fixed across one, two or five years.
- Stocks and Shares ISAs – offered by most investment platforms, with the ability to choose a bespoke or a strategic portfolio of stocks and shares, adjusted for your individual risk requirements.
- IFISAs – offered by most peer-to-peer lending platforms, crowdfunding platforms, long-term asset funds (LTAFs) and open-ended property funds, subject to investor eligibility.
- Lifetime ISAs (LISAs) – offered by some banks and investment platforms, this ISA is capped at £4,000 per year and can only be used for a first home purchase or pension, subject to investor eligibility.
For the current 2025/26 tax year, up to £20,000 can be invested in either a Cash, Stocks and Shares or Innovative Finance ISA before the ISA deadline. However, from April 2027, the Cash ISA allowance will be reduced to £12,000.
The diversity of choice in the ISA space means that you can choose to spread your annual allowance across a range of different types of saving and investing accounts before the ISA deadline. For example, you may choose to use up the entire £4,000 LISA allowance, and then divide the remaining £16,000 allowance across Cash, Stocks and Shares, and IFISAs.
It is also possible to diversify your money even further by investing in several different Cash ISA accounts, Stocks and Shares accounts and IFISAs.
But when time is of the essence, and geopolitical challenges are wreaking havoc with the global equity markets, decisive action is required.
Why consider an IFISA before the ISA deadline?
Every ISA has its place. Cash ISAs can provide capital security and liquidity, but real returns may be modest once inflation is taken into account. Stocks and Shares ISAs offer market exposure and long-term growth potential, but short-term volatility can be uncomfortable, particularly in uncertain macroeconomic conditions.
For investors who are seeking yield without full equity market exposure, the IFISA is worth a closer look.
An IFISA allows investors to earn tax-free returns by lending through FCA-regulated peer-to-peer and private credit platforms. This offers diversification away from the equity markets, and the possibility of earning fixed returns by backing British businesses and supporting the domestic property market.
The key risk with IFISAs is that one or more of the underlying loans will fall into default. This risk can never be completely eliminated, but it can be minimised through good portfolio management and the addition of collateral on all loans.
Before choosing an IFISA, do your due diligence on IFISA providers and make sure that you choose one which is FCA-registered, and has a long track record in the market. While past performance is no guarantee of future returns, it is also helpful to look at a platform’s history to get a sense of how it responds during times of economic stress, such as the Covid pandemic.
Timing is important when it comes to investing, but in a rapidly changing world with multiple stress factors hitting the market simultaneously, the priority should be to simply make smart and informed choices with your money while taking full advantage of any tax efficient benefits that are available to you. Before the ISA deadline has passed, carve out some time to look at your financial goals and shelter your cash from the tax man, ideally whilst also earning inflation-beating returns.
| Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more. |