This page explains how PoundLogic's ISA calculator works. Use the calculator at /investing/isa-calculator/.
What this calculator does
Takes a starting balance, monthly contribution, annual return rate, and time horizon. Returns the projected ISA value at the end of the period, the total amount contributed, and the tax-free growth earned. It compares a Cash ISA (using the interest rate entered) against a Stocks & Shares ISA (using the investment return rate entered).
The formula
Future Value with regular monthly contributions: i = (1 + r)^(1/12) − 1 ← monthly rate from annual rate r n = years × 12 ← total months FV = P × (1 + i)^n + PMT × [(1 + i)^n − 1] / i Where: FV = final pot value P = starting balance (£) r = annual return rate (decimal — 5% = 0.05) i = equivalent monthly rate n = number of months PMT = monthly contribution (£) Applied separately for Cash ISA (using cash rate) and Stocks & Shares ISA (using investment return rate).
Assumptions
- Contributions are made at the end of each month.
- The return rate is constant throughout the period — no market volatility is modelled.
- Returns are reinvested automatically (compounding).
- The full ISA tax-free status applies for the entire period — no tax on interest, dividends, or capital gains.
- No platform fees, dealing charges, or other costs are deducted. To see the impact of fees, use the Platform Fee Comparison calculator.
- No withdrawals are made during the period.
- The starting balance is assumed to already be inside an ISA wrapper.
- UK resident throughout.
Data sources
| Figure | Value used | Source | Last checked |
|---|---|---|---|
| ISA annual allowance | £20,000 | HMRC — Individual Savings Accounts | April 2026 |
The annual allowance is used to cap the maximum yearly contribution the calculator accepts. The growth formula itself is independent of this limit.
Limitations
- Does not model platform fees — a 0.25% annual fee on a large pot significantly reduces long-term returns. Use the Platform Fee Comparison calculator.
- Assumes a constant return rate. Real equity market returns vary considerably year to year.
- Does not model the LISA government bonus (25% on up to £4,000/year). Use the LISA calculator.
- Does not model the Junior ISA (JISA) allowance (£9,000/year). Use the JISA calculator.
- Does not account for inflation — the final figure is in nominal terms (today's pounds). Real purchasing power will be lower.
- Cash ISA rate is held constant; real savings rates change over time with the Bank of England base rate.
Worked example
Inputs: £0 starting balance, £200/month, 5% annual return, 20 years.
Step 1 — monthly rate:
i = (1.05)1/12 − 1 = 0.004074
Step 2 — months:
n = 20 × 12 = 240
Step 3 — future value:
FV = 0 × (1.004074)^240 + 200 × [(1.004074)^240 − 1] / 0.004074 = 200 × [2.6533 − 1] / 0.004074 = 200 × 405.8 ≈ £81,160
Total contributed: £200 × 240 = £48,000
Tax-free growth: £81,160 − £48,000 = £33,160
Changelog
| Date | Change |
|---|---|
| May 2026 | Initial publication |
Questions or corrections? Email [email protected].