Project tax-free ISA growth.
Final ISA value
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Total contributed
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Worked example
Pay the full £20,000 allowance into a Stocks and Shares ISA at the start of each year for 20 years, assuming a 7 percent average annual return. Your own contributions total £400,000, but compounding turns the pot into roughly £877,304. That means about £477,304 of investment growth, and because it is inside the ISA wrapper, every penny of it is free of income tax, dividend tax, and capital gains tax. The growth outweighs the contributions because returns in the early years earn returns of their own for two decades. Outside an ISA the same gains could attract capital gains tax at 18 or 24 percent and dividend tax, so the wrapper is doing real work over a long horizon.
| Item | Amount |
|---|---|
| Contributed over 20 years | £400,000 |
| Tax-free growth at 7% | £477,304 |
| Final ISA value | £877,304 |
How it is calculated
The projection uses the future value of an annuity-due, meaning each year's contribution is assumed to go in at the start of the year and then compound for the rest of the term. The tool multiplies your annual contribution by a growth factor built from the return rate and the number of years, which sums every year's compounded balance into one figure. Total contributions are just the annual amount times the number of years, and the difference between the final value and the contributions is the growth. The 2026/27 ISA subscription limit is £20,000 across all ISA types combined, and all growth and withdrawals are tax-free with no impact on your tax return. The model assumes a constant return every year, which real markets do not deliver, so treat the output as a smoothed long-run illustration rather than a guarantee.