ISA mistakes to avoid in 2026

If you’ve already got an individual savings account (or ISA for short), you’ll know that they are great way to shield your cash and investments from tax. 

But even seasoned investors can slip up when it comes to the ISA rules, or make mistakes that end of up costing them money. In this video we’ll run through the biggest ISA mistakes UK investors make and how to avoid them. 

Think of it like an ISA checklist to help you make the most of the ISA allowances and tax perks on offer.

1. Picking the wrong type of ISA

There are five types of ISA that you could open today. This choice means it is easy to pick the wrong type of ISA to match your goals.  

• A cash ISA might be fine for short-term savings,
• But if you’re putting away money for the long, a Stocks and shares ISA is likely to give you a better chance of beating inflation and growing the value of your money.
• If your main goal is buying your first home, you could get your hands on a government bonus in a Lifetime ISA. This isn’t available on other ISA types but there are some extra rules to keep an eye on.

2. Paying unnecessary extra fees

Keeping your ISA fees low means you keep more of your ISA returns. While there will be fees to pay for investing, you should check you are only paying for the features you need.

Investing too often or holding ISA accounts spread across multiple providers could mean paying more dealing or platform charges than you should. 

3. Not using your full ISA allowance

The tax-free ISA allowance is currently £20,000 per adult, per tax year. The tax year runs from 6 April one year to 5 April the next.  You can’t carry allowances forward between tax years, so if you get to the end of the tax year and you don’t use it, you lose it. It’s worth thinking about contributing what you can into an ISA before the tax year ends, even if you plan to invest the cash later.  

The £4,000 payment limit for a Lifetime ISA also runs in the line with the tax year, and sits within that overall £20,000 ISA allowance.

4. Thinking you can only have one ISA each year

The rules have changed over the years, so it’s easy to see why this myth has made the list. The truth is that you can hold multiple ISAs at the same time and you can pay into more than one of the same type in a tax year, too. This has been the case since April 2024. The only exceptions to this rule are Lifetime ISAs and Junior ISAs, where you can only pay into one account of each type every tax year.

If you want to make use of this flexibility, just make sure you are keeping track of what you’ve paid in and where, to make sure you don’t go over your ISA allowance.

5. Going over the allowance

This brings me neatly to the next mistake, going over your ISA allowance. Adults have a £20,000 allowance across all ISA types combined. Within that, the Lifetimes ISA has its own payment limit of £4,000 with in that. Multiple accounts and can mean it is easily done, but breaching the over ISA allowance can cause problems. 

If you do accidentally pay in more than £20,000 in total, HMRC will need to adjust things for you. Rather than try and fix it yourself, you should contact HMRC who’ll work out what has gone wrong and tell you what to do next. 

6. Losing track of old ISAs

Over the years you might have opened several ISA accounts. Some might be gathering dust, earning low interest, or the investments inside might no longer be right for you. One of the great perks of ISAs is being able to get your hands on your money when you need it. You won’t be able to do that if you don’t know where it is. 

Find your ISAs and thinking about transferring (or combining) them into a single account. Fewer ISAs mean it’ll be easier to  

1. review what’s inside
2. make your ISA easier to manage alongside your goals, and lastly,
3. it could even cut your fees too.  

Summary

These are practical, everyday things that can help you keep more of your money growing tax-free inside your ISA — especially with the tax year end approaching.

So before the 5 April deadline, take a few simple steps: 

• check the right ISA type for your goals 
• maximise your allowance 
• consolidate and cut unnecessary costs 
• and keep better track of your accounts

ISAs are powerful — but only if you use them well.